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Japan’s FSA issues policy guidance on cryptocurrencies and ICOs

In a recently published document, the Japanese Financial Services Agency (FSA) has clarified its financial administrative policies, which includes its policy on fintech and virtual currencies, Bitcoin.com reported.

The agency underscored the need to protect digital currency exchange users. It said that digital currencies use blockchain technology “which was not seen before,” adding that daily business management and system management are required to protect users.

“Since the beginning of 2017, the virtual currency price fluctuations and various movements have been seen in the virtual currency market such as currency forking,” it said (as translated by Bitcoin.com).

To that end, the FSA said that it will focus on establishing a balance between “promotion of innovation and protection of users”. It said that it will look at the trends in the cryptocurrency market and ensure that “appropriate business operations [are conducted] at virtual currency exchange companies.”

“It is necessary to monitor whether the system is in place…we will respond to changes in the environment surrounding the virtual currencies for protecting users, such as verifying [that] appropriate explanation / information provision for users is in place,” it added.

Furthermore, the agency said that it seeks to ensure the security of the users “through safe and stable system operation and fraud prevention.” For this, it will verify the establishment of the appropriate risk management system at cryptocurrency exchanges and determine the implementation of effective countermeasures to prevent fraudulent acts.

With regard to initial coin offering (ICO), the FSA noted the increase in token sales, adding that fund settlement law may be applicable to ICOs. It said:

For fraudulent ICOs, we will respond in cooperation with ministries and agencies, promote a voluntary response by the industry and users…We aim to protect users by alerting them to ICO risks.”

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