ICOs gain more and more popularity among companies. This way of raising funds is simple yet effective. What is more, in many countries it provides companies with a loophole in the law. Japan is one of the countries which have already adopted some laws on cryptocurrencies, but the recent report of the Financial Service Agency (FSA) showed that the sphere of ICOs can hardly be controlled by the existing legislation.
Cryptocurrencies are widely spread in the Asian region – and the interest is not expected to fall. The existing bitcoin payment law was adopted in last April. Even though it was a big step for Japan, the law lacks the specifics of ICO.
At the moment the FSA is working hard on the legal framework on ICOs. As stated in the report, “there is an increasing demand for amendment of the law, and the FSA is planning to consider suspension of inappropriate ICOs.”
The FSA has already made some notable steps towards the controlled ICOs in Japan. According to the report some of the companies which are using initial coin offering as a way of funding are seen as suspicious. The intervention of the FSA is not strong now, but the first actions are already made. Especially indicative is the story of Blockchain Laboratory.
This is a Macau-based company which is working on cryptocurrency service. The FSA accused the company on providing services without a license. Blockchain Laboratory works with the domestic Japan’s investors. The FSA published an official warning – but this is only beginning.
The initiative on developing a law on ICOs is not new for Japan. In October 2017 the FSA issued a statement on risks that arise while working with ICOs. They include the high volatility of cryptocurrencies and the wide spread of fraud in this market. The regulation of initial coin offering deserved a special mention. The FSA reminded that this process is regulated and must be executed according to the Payment Services Act and/or the Financial Instruments and Exchange Act.
The clear definition of ICOs is not only a matter of governmental and taxes issues. The FSA is also working on the protection of the domestic investors of Japan. The law which came into existence in April 2017 was a good initiative, but it has to be developed and upgraded.
Japan is not the only country which has recently began working on developing ICOs’ legislate. The previous week brought the news on ICOs from Europe. On the 22nd of February Germany announced the creation of ICO tokens classification. The next day Austria shared the plans on developing ICO and cryptocurrency regulations. The more countries establish the regulations on ICOs, the more trust this industry is to gain.