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Japan’s Financial Watchdog Might Approve Cryptocurrency ETFs After Saying No to Futures

Last Updated March 4, 2021 3:17 PM
Mark Emem
Last Updated March 4, 2021 3:17 PM

The Financial Services Agency of Japan is considering approving exchange-traded funds which track digital assets, Bloomberg reports .

According to sources who confided in Bloomberg, the financial regulator is at the moment gauging sector interest in exchange-traded funds tracking cryptocurrencies.

This comes less than a month since the financial watchdog put aside plans for cryptocurrency futures. Consequently, the regulator abandoned efforts to revise Japan’s securities law, a move that would have seen the listing of cryptocurrency options and futures on major financial exchanges.

Then, the financial watchdog explained that the decision was based on the fact that introducing such products would only have stoked speculation and little else. Allowing cryptocurrency futures would have seen Japan join countries such as the United States which already have listed futures which track bitcoin.

Self-regulation and Leverage

Besides shelving plans for cryptocurrency futures in Japan, other steps that the Financial Services Agency is taking include giving more powers of oversight to regulatory bodies appointed by sector bodies and members. Additionally, Japan’s Financial Services Agency also intends to cap the leverage which can be provided by exchanges and brokers.

And as CCN.com reported earlier last month, the FSA also intends to place the majority of initial coin offerings under the country’s securities law.

Some of the proposals that the FSA has put forward in this regard include requiring ICO issuers to register with the financial watchdog. These and other proposals are likely to be contained in a bill which the country’s ruling party will submit before the current parliamentary session ends in two months’ time. It is expected that the proposals could become law by the end of next year.

While Japan has suffered some of the biggest cryptocurrency heists in the world leading to calls for stricter regulation, the financial watchdog has been careful to avoid taking measures that would strangle the crypto sector.

Sector-Friendly Measures

Last year in August, FSA commissioner Toshihide Endo ruled out excessive regulation for cryptocurrency exchanges arguing that it was important to promote innovation by avoiding restrictive policies, as CCN.com reported at the time:

We have no intention to curb [the cryptocurrency sector] excessively. We would like to see it grow under appropriate regulation.

This approach by current and past regulators has given Japan an edge over the rest of the world in the cryptocurrency markets. Currently, the Far East Asian country is the globe’s biggest crypto exchange market ahead of South Korea and the United States.

Featured image from Shutterstock.