Japan seems to be wrapping up the entire story with the legalization of the last thing in cryptocurrency game, while other countries are still debating whether to legalize cryptocurrencies or not. The Rule-Making Strategies center at Tama University has released the very first paper listing the guidelines for the complete legalization and regulation of ICO (Initial Coin Offerings) in the island nation.
The active ICO Business Research (ICO BR) Group went ahead and published it yesterday. This group is backed by Japan Government and consists of top-notch lawmakers, bankers, and academicians of the country. Member of the ruling Liberal Democratic Party - Takuya Hirai; Banks like Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc and Sumitomo Mitsui Financial Group Inc. are integral advisors in the group. The CEO of Japan’s largest cryptocurrency exchange bitFlyer, Yuzo Kano is also one of the leading members of ICO BR.
The published report proposes that the ICOs should be legalized with standardized rules and practices to encourage growth in the industry while protecting investors at the same time. It states:
“ICO is still in its infancy and has no industry practices yet. Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method.”
The guidelines also shared that Crypto Exchanges should adopt global standards for token listings. They should further take into account the possible cases of insider trading in token sales which can help authorities to take legal action against the involved culprits. The report firmly suggests that the legal treatment for insider trading in token sales should be same as the treatment for insider trading in other financial markets (i.e., equity markets).
On the other hand, ICO operators will require to perform KYC (Know Your Customer) verification on all their contributors and also make enough disclosures about the risks involved in their ICO before initiating the offerings. And when ICO completes, the operators should keep the investors updated on how closely is their project 'sticking to the roadmap' outlined at the time of offering.
While the report is framed keeping in mind the current outlook, it sites that regulators can also adopt more detailed or alter rules and regulations according to certain requirements. For instance, they can restrict specific ICO structures completely, if required. Thus the guidelines have clear stance and standards for identifying investors, anti-money laundering (AML), tracking project progress and also safeguarding existing equity and debt holders.
The report is yet in the initial stage and will be considered by Japan FSA as early as this month. Nonetheless, their implementation as the law may take a considerable amount of time. But this whole scenario how ahead Japan is from other countries when it comes to cryptocurrency regulation. And when the guidelines are legalized, it will further boost country's image as one of world’s leading cryptocurrency and blockchain technology hubs.
