Japan could sideline crypto investment trusts, while some of the country’s leading financial firms have developed a securities token association.
The Financial Services Agency, the regulator that policies Japan’s exchanges and crypto businesses, has provisionally updated its parameters on financial instruments. In an official press release, the agency stated:
“It appears that financial products that involve investments in [cryptocurrencies] will be created in the future, but there are also indications that investment in [cryptocurrencies] would encourage speculation. The FSA believes that it should carefully handle the sale of investment trusts that invest in such assets.”
In another document, however, the agency further stated that trusts that invest in crypto could be deemed “inappropriate”, since investment trusts were “mainly intended to be invested in specific assets.” However, the governing body has ruled that crypto should be classified as “non-specific assets.”
The FSA has embarked on a month-long consultation period for its proposal, though the regulator has previously proven very hard to sway on crypto-related matters. According to media outlet iForex Japan, the decision will at least make crypto trust offerings “very difficult” in Japan.
While it’s possible for companies to ignore the guidelines and offer deregulated trust products, few financial firms or cryptocurrency exchanges have dared to stand up to the FSA in the past, and many are likely to conform to the agency’s ruling.
In the meantime, the country’s six largest financial companies have come together to develop a Japanse Security Token Offering (STO) self-governing alliance.
The group constitutes thee crypto exchange operators; the Monex Group, which owns Coincheck exchange, as well as SBI’s securities arms and Rakuten, which both run their own exchange platforms. Others include the big-hitting traditional finance firms in the form of Daiwa Securities, Nomura Securities and Kabu.
According to a Monex statement, the association has appointed the highly influential and cryptocurrency-keen Yoshitaka Kitao, CEO of SBI and member of the board at Ripple, as its president. The group also wants to get official recognition as a self-governing body from regulators like the FSA.
The newly formed body is called the Japan Security Token Offering Association, and states that “sufficient conditions are in place for STOs to become widely used in Japan. The association says it was formed “so that STO business opportunities can be explored and developed in Japan.”