Japanese Regulators Foresee Crypto Growth: More ICOs and Exchanges Coming in 2019

Japan has been known as a country that is relatively in favor of the development of cryptocurrencies. It has openly supported the use of Crypto in macro-economical spheres as well as in all kinds of brick-and-mortar businesses. Social media is inundated on the daily with videos and images, taken in Japan, of people paying for their food at restaurants or even giving some charity in Bitcoin or in other Cryptos.

It is true that the Japanese government has been more supportive than many others. Historically, Japanese government has been highly positive toward new revolutionary technologies where its development is seen as almost sacred and of the utmost importance; Blockchain and Crypto do not seem to be of any kind of exception.

It has been reported that in this New Year 2019, Japan is preparing to host more ICOs and that it is already studying a long list of applications for new Crypto-based Exchanges. One can imagine that with all these developments in the works, the Japanese government is foreseeing a growth in Crypto in the coming year.

ICOs and Exchanges have been called the weak spots of Crypto upwards of probably one billion times. ICOs have been a popular means to collect funds, but many scams hit the landscape and were perpetuated by ICOs in 2017 and even into 2018. Thousands or maybe even hundreds of thousands of people lost hundreds of millions of dollars because these fraudulent ICOs ran away after collecting funds leaving their investors with their hands full of valueless tokens.

Exchanges have been, according to a high number of analysts, the other extremely weak point that affected not only cryptocurrency markets but also the very paradigm of democratic development through Decentralization. Exchanges represent the most centralized nodes of Crypto to these thinkers and many cryptocurrency users seem to share this opinion. Exchanges have been accused of being worse than traditional banks shutting people’s accounts without good reasons, manipulating the market for their own interests and even of faking trade volumes by wash-trading in order to gain popularity and to affect the prices of assets.

The Japanese government shows a proactive attitude in relation to these problems. Information regarding the new regulations for ICOs was released by the Japan’s Financial Services Agency (Kinyuchoo). It is planning to establish a new structure of regulations for startups that plan to conduct an initial coin offering (ICO). The FSA is planning to present a bill to the Diet (Japanese Legislative Organ) asking for changes in present laws, as the new year starts.

The petition includes granting more permission to authorities to regulate the way in which ICOs are conducted, to establish limits for the amount of funds that a single investor can inject into the startup and to impose rules that generate more security for investors.

The government wants ICOs to present more detailed information that justifies the need for the requested funds and that demonstrates that the project is legitimate. The startup would also have to provide evidence showing that, following the ICO, the project will behave in an honorable way and act according to all the promises made to investors. In reference to the limitation in the amount of money one can invest, it is said that this would be imposed to avoid the proliferation of the so-called “whales” that tend to have too much power and are able to manipulate the market.

The news in relation to new restrictions for Exchanges comes equally from the FSA. The FSA happens to be the only governmental organism in Japan that is in charge of regulating cryptocurrencies. The FSA is claiming now to have already in their hands about 190 cryptocurrency license applications from exchanges.

It is thought that new rules related to security and manipulation will be set for Japanese exchanges. However, there is more. A study of the FSA has apparently divided cryptocurrencies into three global categories which might affect how the operations of the Exchanges will support them. The three categories are: 1) Cryptocurrencies with no issuer (for example Bitcoin); 2) Cryptocurrencies with issuers (like many that come from ICOs and centralized projects); and 3) Cryptocurrencies with distributed profits (like securities).

It might be the case that Japan is planning to regulate virtual currencies in a more complex way than just imposing one type of general rules for all. The main idea seems to tackle the problem of centralization of power and manipulation of the market that Exchanges are apparently involved in. This will probably be done by starting with the considerations on the type of risks that each kind of asset represents.

Once again, Japan’s leadership in the development of crypto is evident. These potential new measures are seen by investors as a very positive move. When their government offers clear and solid backup, Japanese investors feel more secure and protected, and consequently, they feel more comfortable with and motivated towards investing in cryptocurrencies and using blockchain. Also, international investors will see a good option in Japanese exchanges. This could help Japan gain more global attention from investors in many countries thanks to this political active support of crypto.

What do you think about the Japanese FSA seemingly warming up to crypto?