Japan’s financial regulator will closely monitor and scrutinize bitcoin exchanges in the country from October.
Japanese bitcoin exchanges will reportedly be under “full surveillance” by the Financial Services Agency (FSA), Japan’s financial regulator and watchdog. According to the Japan Times, the FSA will increase its scrutiny of digital currency exchanges by looking into their internal systems including those to protect customers’ assets. The ‘surveillance’ will also authorize the watchdog to carry out ‘on-site’ inspections of bitcoin exchanges.
The increased oversight comes in the months following Japan’s legal classification of bitcoin as a recognized method of payment. As CCN reported in March 2016, the Japanese cabinet passed bills to recognize digital currencies like bitcoin as the digital equivalent of money. Those bills came to pass in April this year when bitcoin was classified as a legal method of payment. Come July, Japanese officials formally put an end to the 8% consumption tax rate on transactions of bitcoin bought through exchanges.
Bitcoin’s status as a form of legal tender coincides with the revision of the payment services law in April that mandated a number of requirements and standards for exchanges in Japan. The rise in popularity and adoption of bitcoin in the country has the country’s financial regulator enforcing regulatory guidelines while promoting the sector’s growth.
Sunday’s Japan Times report cites an FSA executive as stating:
We pursue both market fostering and regulation enforcement…We aim for sound market development.
Under the new rules, Japanese exchanges are required to register with the FSA before the September while complying with the newly revised rules payment services law, ahead of applying for licenses to operate as regulated exchanges.
The FSA has also reportedly established a 30-member team specifically to carry out surveillance of virtual currency exchanges in the country.
As CCN reported earlier in July, the oversight and scrutiny by Japanese authorities was to be expected so as to avoid any scenario of a Mt Gox-like collapse in the country.