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Japan’s Financial Services Agency (FSA) is reportedly considering a significant shift in its regulatory stance, with the agency eyeing crypto assets as securities. This move could have far-reaching implications for the country’s cryptocurrency market, potentially paving the way for the approval of spot exchange-traded funds (ETFs).
According to an exclusive report by Nikkei, Japan’s FSA has initiated internal discussions within a closed study group comprising experts to assess the current regulatory framework governing crypto assets. The agency aims to determine the direction of potential system reforms based on these findings by the end of June and will then seek opinions from the Financial System Council, scheduled to convene in the autumn.
If successful, this overhaul could lead to the legal classification of crypto assets as securities, making it more likely that cryptocurrency-linked ETFs will be approved in Japan. The specifics of the new framework remain unclear at present, with key issues yet to be resolved.
The agency is considering three primary options: incorporating crypto assets into the existing securities framework outlined in the Financial Instruments and Exchange Act, introducing a new regulatory framework within the same law, or addressing them under the Payment Services Act.
The debate surrounding the classification of crypto assets has been ongoing. In August last year, FSA Commissioner Hideki Ito expressed caution regarding the approval of cryptocurrency-linked ETFs, calling for careful consideration. Meanwhile, Prime Minister Shigeru Ishiba has also expressed skepticism about the feasibility of incorporating Bitcoin into Japan’s national reserves.
Despite these reservations, Japan’s domestic cryptocurrency industry has been pressing for regulatory clarity. The Domestic Cryptocurrency ETF Study Group published a set of recommendations in October that advocated for the establishment of cryptocurrency ETFs and spot transactions in Japan. Their proposals prioritized major cryptocurrencies like Bitcoin and Ethereum, along with establishing necessary regulatory frameworks and introducing a distinct tax structure.
In contrast to its stance on the potential inclusion of Bitcoin in national reserves, Japan remains hesitant about adopting the cryptocurrency as part of its foreign exchange reserves due to concerns regarding security, liquidity, and volatility. The Government Pension Investment Fund has been exploring the possibility of incorporating Bitcoin for diversification purposes, however.
The proposed regulatory changes could have far-reaching implications for the country’s cryptocurrency market.
Source: cryptopotato.com
