Regulators and financial watchdogs are known to scrutinize anything they can’t fully understand. This is especially true when it comes to Bitcoin and cryptocurrencies. In Japan, financial regulators will start paying more attention to local Bitcoin exchanges. That is a strange development, considering how cryptocurrency received legal status in the country earlier this year. It does not appear this will introduce any significant negative changes, though.
In a way, it was only to be expected we would see more exchange regulation. Bitcoin continues to irk regulators all over the world. Financial institutions have no love lost for cryptocurrency either these days. One thing no one expected was to see the Japanese financial watchdog cause too many problems. With their plan to scrutinize local cryptocurrency exchanges, the future looks a bit unclear once again.
Full Exchange Surveillance Mode in Japan
The local Financial Services Agency will put all domestic exchanges under “full surveillance” come October 2017. This is a very vague statement which can have many different implications, to say the least. It appears the main focus lies on monitoring internal systems and on-site inspection. We have seen similar actions undertaken in China. Eventually, those actions resulted in closing all local currencies-based cryptocurrency trading for the time being.
It is doubtful things will go that route in Japan, though. More specifically, Bitcoin received legal status in the country earlier this year. Japan is now the largest Bitcoin exchange market in the world, followed closely by South Korea. With China cracking down on cryptocurrency, a lot of traders flocked to Japan. For the time being, no one knows for sure what this new crackdown will entail exactly. It is evident there are some concerns of protecting customer assets, although the specifics remain unclear for the time being.
Whatever the outcome may be, this decision will have major repercussions for cryptocurrency in general. All local exchanges need to register with the FSA before the end of the month. We do know Coincheck has already received its new license under these revised guidelines. It is evident most platforms will not struggle with this concept whatsoever. Additional scrutiny doesn’t have to be negative per se, though. It is unlikely the legal status of Bitcoin will be revoked all of a sudden, that much is certain.
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