Osaka, JAPAN – Japan’s Financial Services Agency is set to launch regulations on initial coin offerings (ICOs) to protect investors, as reported by a press release from local news site Jiji.
The report states that the regulations may limit how much individuals can invest in an ICO, a capital formation tool where new businesses solicit investment from the cryptocurrency community to fulfill an advertised purpose. As mentioned in the press release:
“The FSA will require business operators that issue their own cryptocurrencies to be registered with the agency, the sources said.”
Cryptocurrency advisory firm Satis Group released a damaging report in March that indicated approximately 80% of ICO offerings were scams, and that the vast majority of what remained was anything but promising.
It is expected that regulations will come into effect early next year after parliamentary bills to revise the laws surrounding financial instruments and exchange law are passed. This is not the first time the FSA has contemplated bringing about change in Japan’s crypto ecosystem. Last month the FSA were in talks about regulating crypto wallets after thoroughly auditing exchanges. A local media outlet was quoted as saying, “Wallets are like bank accounts that store virtual currencies. While wallet service providers handle large amounts of virtual currencies like exchange companies, they are not targeted by laws and regulations.”
If this information is accurate, Japan will be one of the few big markets regulating digital assets and new ways of crowdfunding. This could be a catalyst for new startups to begin their ventures in the country as the importance of clear regulations for young businesses is hard to overstate.