Japan has been probably the greatest supporter of cryptocurrencies and their regulations. The country is known for its lean regulatory frameworks, as well as great tolerance about the use of Bitcoin. Not long ago, it was reported that many Japanese workers can choose how they want their salary: in the form of Bitcoin or fiat money.
As the cryptocurrency market is currently plunging and Bitcoin’s price is seeing new lows, and the cryptocurrency theft that happened at Coincheck Inc, one of the most successful Japanese cryptocurrency operators, Japan is imposing stricter regulations on the entire market. The wider acceptance and use of Bitcoin has allowed for more speculative investments and uses in general. As a result, the price of Bitcoin is Japan has increased significantly.
This has triggered the Japanese Financial Services Agency to rethink its position on cryptocurrencies and look for the appropriate regulations.
According to a research by the Japan Times, the number of cryptocurrency users has increased to 3.5 million, and the total value of transactions that involve several major cryptocurrencies total $621 billion.
The major problem stems from the fact that the trading of cryptocurrencies is not regulated by the Financial Instruments and Exchange Act, which rules anti-insider trading issues and other issues, as well, trading with cryptocurrencies is basically in the “grey zone”.
In the spring of 2017, Japan did a major revision of the Payment Services Act so that all cryptocurrency users are protected. It is this revision that assumed greater use of cryptocurrencies and more “lenient” regulation.
Once cryptocurrencies were protected, the user base and transaction volume grew in line. However, contrary to what the FSA believed that cryptocurrencies are used for payments and daily transactions, more users placed speculative bets and investments using Bitcoin. So the mismatch between what the FSA believed to be true of Bitcoin users and what is actually the case in Japan is causing the new, stricter regulations so as to “tame” the price and “popularity” of Bitcoin.