Japan’s financial watchdog could embrace exchange-traded funds that track the value of Bitcoin and similar digital asset classes, Bloomberg reported.
The Financial Services Agency (FSA), according to an anonymous source, has been exploring Bitcoin ETFs on the sidelines of its disapproval of the Bitcoin futures and Ethereum derivatives. The agency has clarified that it will not make modifications to Japan’s existing securities laws to cater for crypto assets. The decision came as a blow to the Bitcoin industry, which was looking to draw significant funds from the institutional markets after undergoing a very depressive year recently.
The FSA’s stance has been handled to the ruling Liberal Democratic Party. It should allow the political group to table a bill during the current Diet session. By 2020, Japan could be looking at a stricter Bitcoin law, according to which self-regulation could draw more regulatory oversights, ICO sector could come under the securities law, and crypto brokers could lose their leverages.
This comes just less than a month after the financial watchdog shut down plans for cryptocurrency futures due to abandoned efforts to revise Japan’s securities law. As Bloomberg reports, the FSA feels that cryptocurrency options and futures would only fuel speculation.
The sources claimed that the pertinent Japanese agency is currently doing its utmost to “gauge industry interest” in Bitcoin ETFs, as it attempts to provide investors with an alternative to the aforementioned derivatives, which could create an environment rife with speculation and little utility.
It appears that Japan’s stance on cryptocurrency trading products is in direct contrast to that of the United States. In comparison, the U.S. has already approved Bitcoin options and futures but is hesitant on approving a Bitcoin ETF.
Despite the U.S. stance on approving an ETF, there is some speculation that the on-going government shutdown in Washington could lead to the Securities and Exchange Commission (SEC) automatically approving an ETF if they fail to make a decision by the deadline.
Japan’s Financial Services Agency has turned over the responsibility of overseeing cryptocurrency exchanges to the Virtual Currency Exchange Association (JVCEA).
Again, this move is contrary to what regulators are doing in the United States, and allows for the industry to better foster innovation in this fast-moving space.
Moreover, the FSA has also put forward some proposals to place the majority of initial coin offerings (ICOs) under the country’s securities law, which would require that ICO issuers register with the FSA. These proposals will likely be contained in a bill that will be submitted before the current parliamentary session ends in 2 months’ time.
Overall, Japan’s financial regulators are lenient with their regulations in the cryptocurrency industry. They do not want to hinder innovation; they want to foster it.
Japan’s FSA commissioner, Toshihide Endo, previously stated: We have no intention to curb [the cryptocurrency sector] excessively. We would like to see it grow under appropriate regulation.