Why ICO’s Need to Be Regulated?
Before moving forward to discuss ICO regulations ion JAPAN, let us have a brief look at the fundamental question that arises in our mind that WHY ICOs NEED TO BE REGULATED?
Primarily it is obligatory to understand that the Law is the oil that makes our society operate as a whole. It provides the trust that is needed between the parties and also reduces the moral menace. Trust is the key factor that allows people to do or run business with each other, without being violent when a party is dishonest or disloyal.
The Rising number of frauds involving Ethereum tokens and ICO’s on other platforms has made the news in the recent past. Far more scams are yet to be exposed. Still, the way in which the regulation is executed is critical, as the law must not be a burden to innovation. The Regulators are only moving in because the governments fear losing the power.
ICO regulations vary from county to country and their respective Governments and their regulatory principles according to which their country functions. Let us discuss about the ICO regulations in JAPAN that has been issued recently this year.
ICO Regulations in JAPAN:
As per the reports, as on April 4, the Centre for Rule-Making Strategies at Tama University, Tama, Japan has issued the list of principles for the regulation and full validation of initial coin offerings (ICO) in Japan.
The list of guiding principles from the government study group includes the rules for Anti-Money laundering (AML), recognizing the investors, keeping track record of the progress of the project, as well as securing the existing equity and debt holders. Japan’s Financial Services Agency will be deliberate on the proposal, which could finally be transformed into the law in a few years’ time.
The paper proves the issuance principles, such as determining and revealing the ways of tracking the progress of the white papers, and unfolding the potential influences on token investors, shareholders, and debt holders.
Moreover, the paper specifies definite trading principles, among which there are some confirmation of customer identity and suitability (KYC), the assumption of industry-wide standards on the token listings.
While accepting that it is not going to be easy at present to categorize the whole ICO since many upcoming but unknown types of ICO may exist, but the paper suggests that the regulations will apply to three types of ICO, first is a venture company type, second being an ecosystem type for combining efforts with multiple corporates or government, and third is a large company type for remote project funding in which high risks are involved.
The story recognizes ICOs as securities that are similar to the position taken by the US Securities and Exchange Commission(SEC). Mr. Kenji Marashima, a well-known researcher claimed that ICOs are the pioneering technology which certainly has high potential of becoming a new way of raising funds only if we apply good regulatory principles to it.
Mr. Takuya Hirai, an advisor of one study group, is also a member of the ruling Liberal Democratic Party, and one of the designers of the law authorizing the cryptocurrency exchanges in Japan the previous year. Other members of the group are the head of Japan’s largest Bitcoin exchange bitFlyer Inc., Mr. Yuzo Kano, as well as other experts from the nation’s largest bank, Mitsubishi UFJ Financial Group Inc., Mr. Sumitomo Mitsui.
The issuance of the ICO-friendly regulatory guidelines connects with the positions of China and South Korea, both have completely banned ICOs last year. There is another side effect to it and that is the rising cost of doing an ICO or even running a cryptocurrency related business in the country.
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