Japan’s FSA Prepares Legislation to Prevent Domestic Crypto Outflow in Case of Exchange Failure
The FSA is planning to create a new “holding order” in the existing Payment Services Act.
Japan’s Financial Services Agency (FSA) is working on legislation to prevent the leak of domestic cryptos overseas in case of bankruptcy.
According to a report from local media Nikkei , the FSA is planning to create a new “holding order” in the existing Payment Services Act. This would prevent the outflow of domestic assets when there is an exchange failure.
“The aim is to properly protect the assets of individual investors, as there have been a series of cases of illegal leaks of cryptocurrencies,” the report noted.
FSA’s new proposed holding order would ask crypto exchanges not to take domestic assets entrusted to them by overseas customers.
Here, customers refer to Japanese residents who use foreign exchanges and lose entire funds in case of bankruptcy like FTX.
So far, holding orders have been available only to businesses that are registered as financial instruments exchanges under the Financial Instruments and Exchange Act .
According to the FSA database , 29 exchanges are registered and are already legally restricted from allowing asset leakage overseas.
At the time of the FTX’s implosion, the beleaguered exchange was registered as a financial instruments firm. As a result, a holding order could be issued. However, the proposed changes could safeguard the domestic assets in a much broader scale.
FSA Plans to Review Crypto Regulations
Recently, the regulator has been keen on reviewing crypto regulations, potentially leading to lower taxes and allowing crypto ETFs.
The FSA has been assessing whether the existing framework is still suitable given digital tokens’ evolving role. Japan’s financial watchdog noted that the review would likely continue through the winter, aiming to determine whether investors are protected under the existing act.
Yuya Hasegawa, market analyst at Bit Bank Inc., said that stricter laws could bring “dramatic changes” to Japan’s crypto market.
In addition to the FSA’s review, Japan has already taken several steps to support its crypto and blockchain ecosystem. For instance, the government allowed local investment ventures to invest in cryptos. The move is a part of a broader legislative changes to encourage VC investment in web3 projects, it added.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Bitcoin dips below $100,000, memecoins plummet as market responds to US tariffs
The crypto market has dipped in response to President Trump’s plan to enact steep tariffs on imported goods from Canada, Mexico, and China beginning on Tuesday.Canada and Mexico have ordered retaliatory tariffs in response, while China promised “corresponding countermeasures” and said it would file a lawsuit with the WTO.Memecoins were particularly hard-hit by the downturn, with many top coins seeing double-digit percentage drops. Trump’s memecoin has fallen nearly 30% over the past week.
Ethereum Price Dips, Yet Increased Buying Activity Indicates Promising Future
Despite Bearish Trends, Increased Buying Activity Hints at Potential Breakout for Leading Altcoin, Ethereum
Overview: SOL vs ETH – Deciphering Key Aspects of the Solana-Ethereum Ratio
Untangling the SOL/ETH Dynamics: An In-Depth Look at Solana's Potential for Recovery Following Its Recent 25% Decline
Two Whales Messed Up on Two Different Altcoins – Forced to Sell at a Huge Loss on the Last Drop
According to Onchain data, two different crypto whales sold their positions after losing on two altcoins. Here are the details.