Japanese officials draft regulations for bitcoin trading

Japan’s financial regulator is reportedly moving toward establishing a system to register and oversee domestic digital currency exchanges.

The Japan Times reported that the Financial Services Agency's Financial System Council working group is drafting a document that, once completed, will be submitted to the national legislature next year.

The Japan Times said the draft text calls for a series of capital and audit requirements for domestic trading activities in addition to know your customer (KYC) and anti-money laundering (AML) requirements.

The New York Times further explained: “The draft proposes financial conditions that virtual currency exchange operators must meet certain conditions. Such as a certain amount of capital, and requiring them to separate customer assets from corporate assets and manage them separately. In addition, the draft also requires the introduction of a mandatory system whereby operators need to accept external inspections of the company’s asset management conditions and financial statements by certified public accountants or auditing firms.”

The report also said that the draft text had been in preparation for several weeks when news broke that a working group had been formed to discuss how to regulate Bitcoin trading activities.

Japanese officials have called for stricter regulation of bitcoin since the 2014 collapse of Tokyo-based bitcoin exchange Mt Gox and the arrest of its CEO Mark Karpeles.

Karpeles is currently under investigation for embezzlement and fraud, which resulted in hundreds of millions in losses for bitcoin clients.

The FSA did not immediately respond to a request for comment.

JPM compiled from

Coindesk, Report: Japanese Officials Draft Regulation for Bitcoin Exchanges, by Stan Higgins.