Japan's Financial Services Agency plans to regulate virtual currencies to protect users

     Kyodo News reported on November 16 that the Financial Services Agency of Japan held a financial review meeting on the 16th and began to discuss strengthening legal supervision of virtual currencies such as Bitcoin. In view of the huge amount of Bitcoin stolen from the Bitcoin exchange Mt.Gox, the Financial Services Agency will discuss the implementation of supervision on operators and require the establishment of a mechanism to manage customer assets and operator assets separately, so as to achieve the purpose of protecting users.

     The Financial Services Agency will compile a report as early as the end of the year and improve the relevant laws at the National Assembly next year. Not only will the scope of application of the "Criminal Proceeds Transfer Prevention Act" aimed at combating money laundering be expanded, but existing laws to protect users of financial products and services are also expected to be revised.

     At the meeting, the Bureau introduced the regulatory measures implemented by countries such as Germany and France to protect users. Bitcoin operators attending the meeting said, "We hope the government will create an environment that allows us to compete with American operators" and hope to avoid overly strict regulation.

     The FSA’s intention to conduct regulation came after the Financial Action Task Force (FATF), an international organization responsible for combating terrorist financing, issued a report in June stating that regulation of virtual currency exchanges should be further strengthened. The task force will discuss measures to protect users based on the implementation of anti-money laundering measures required by FATF, such as customer identity verification and reporting of suspicious transactions.

     The Financial Services Agency will be the supervisory agency in the regulatory measures, and will implement a registration and licensing system for exchanges that exchange virtual currencies and cash. If user protection is too strong, the convenience of the service may be damaged, and the severity of the regulatory measures will become the focus.