As the G20 is gearing up to discuss cryptocurrencies and related regulations, Japan will reportedly share its experience regarding this new sector with the entire group at the upcoming G20 summit. According to local media reports, regulators in Japan have a solution for cryptocurrency regulation that they think other G20 countries would accept.
Japan to propose cryptocurrency regulation
Finance ministers and central bank governors from the G20 countries are expected to discuss the issue of cryptocurrency regulation in the upcoming summit in June. In the cryptocurrency space, Japan is regarded as the most advanced country as it legalized the use of digital currencies roughly two years ago.
The report from local news outlet Sankeibiz reveals that regulators in Japan will put together a handbook that each country in the G20 could use to regulate cryptos. The manual will allow them to put together measures to prevent the outflow of cryptocurrencies.
The news outlet states that international rules are currently being developed to stop money laundering and terrorist financing, with cryptocurrency restrictions also being considered. However, there are no rules to help protect consumer investments and the strength of the market. Thus, it will be the first time specific ideas are shared amongst the world’s leading economies.
The G20 countries are drafting a wide range of regulatory measures, with some of them currently over-regulating the new industry. The Japanese media publication noted that since it hard for the G20 to establish standard rules, the regulators in the country have drafted them out in a guidebook. The handbook would help each country understand cryptocurrencies better and how regulations would work for them.
The handbook is expected to address critical regulatory concerns such as the need to protect consumer assets, measures to counter cyberattacks, and the different ways to provide information to the customers.
Japan hopeful its experience would help
Japan is optimistic that its experience regulating the cryptocurrency sector over the past two years could help the other G20 countries. Two major cryptocurrency exchanges in Japan were hacked last year, Coincheck in January and Zaif in September.
Since then, the regulators in Japan, the Financial Services Agency (FSA), has increased its monitoring of the sector and ensured that cryptocurrency licenses are only granted to companies that have a robust security measure in place.
The FSA also carries out routine on-site inspections and rolling out business improvement order to help crypto-related businesses boost the services they offer to the Japanese people. The agency is also planning on introducing new measures for the cryptocurrency industry.
A few weeks ago, the FSA introduced a guide that contains reference cases to help financial firms identify suspicious cryptocurrency transactions and report them to the authorities as required by Article 8 of the Act on Prevention of Transfer of Criminal Proceeds.
In its rule, the FSA considers cryptocurrency transactions involving a massive sum of cash or foreign currency and high-value transactions that do not match a customer’s income or assets as suspicious. In addition to that, accounts that receive remittance from multiple cryptocurrency addresses are regarded as suspicious, especially if large sums of funds were withdrawn after receiving them.
The Japanese regulator is also cautious of the transaction is accounts that are suspected as being fake or with names that seem made up. Thus, the FSA advises financial institutions that customers with numerous accounts, especially under different names, should be tagged and reported to the authorities.
Japan is hopeful that the experience it has so far regulating cryptocurrencies as legal tender in the country could pave the way for the other G20 countries to do the same. The FSA has a robust regulatory measure in place which ensures that while cryptocurrencies are regulated, they are not stifled to stop innovation in the new industry.