Japan to Close USD 74m Crypto Investment Loophole
Japan’s top financial regulator, the Financial Services Agency (FSA), appears set to push for new legislation that will allow it to police cryptocurrency transactions in the same way as it controls conventional yen-based investments.
Per media outlet Sankei Biz, the FSA wants to make changes to a range of laws, including the Financial Instruments and Exchange Act (2006), which require parties seeking investment to register with the regulator beforehand. However, the terms of the act currently specify that only those looking for “monetary” investments need to register – terminology that excludes cryptocurrencies.
The FSA reportedly believes that companies and individuals have been taking advantage of this legal “loophole” and last year had “problems” collecting some USD 74m worth of tax or fines on unregistered cryptocurrency investment deals. Sankei Biz says the FSA is “in a hurry” to prevent a repeat this year.
A range of Japanese laws (including commercial legislation) leave room for “ambiguity” as to whether unregistered companies are subject to regulation if they receive funds in cryptocurrency, rather than Japanese yen or other fiats.
Last year, the Tokyo police investigating an illicit investment ring was forced to drop its case against several individuals when it discovered many of the accused had made their undeclared investments in cryptocurrencies – a fact that made it legally impossible to charge them with a crime.
The FSA may succeed in convincing the government to make these legal amendments as early as spring this year. Per reports, the FSA is also hoping to approve exchange-traded funds (ETFs) that track cryptocurrencies in March, although it will likely not seek to legalize listed derivatives based on cryptocurrencies. Bloomberg quotes “a person familiar with the matter” as stating that the ruling Liberal Democratic Party could be ready to “submit the proposed legislation [to the Japanese parliament] by March.”
Weekly LocalBitcoins, a peer-to-peer bitcoin marketplace, volume (in bitcoin) in Japan: