JPN FSA published a discussion paper on the regulatory approach to crypto assets.
Outline of Discussion Paper
Four major impending issues include improving information disclosure; protecting users, coping with unregistered businesses; responding to inappropriate acts related to investment management; ensuring fairness in price formation and transactions.
Crypto assets are categorized into funding/business activity type and non-funding/non-business activity type, for the purpose of selecting targets for regulatory review.
Regulations on information disclosure/provision should be strengthened to eliminate information asymmetry and enable investors to make accurate investment decisions.
For protecting users, regulations on crypto asset investments should be reinforced while taking into account the impact on the developing token business and innovation.
Cryptocurrency exchanges require appropriate transaction management and system development in that they provide a platform for collective trading with multiple parties.
However, as of now, there is little need to impose strict exchange opening regulations, e.g., regulations based on the license system for financial instruments exchanges, regulations on proprietary trading system (PTS) for financial instruments traders.
The Financial instruments and exchange act (FIEA) prohibits unfair trades but does not directly regulate insider trading; thus, the deterrent effect against insider trading of crypto assets should be enhanced in light of IOSCO recommendations, global trends.
To ensure the effectiveness of regulations on unfair trading, including insider trading, the market surveillance system of the industry and authorities should be improved.
