New guidelines proposed for ICOs in Japan

A Japanese government-backed group has proposed a new set of guidelines for ICOs.

The proposal involves legalizing and regulating initial coin offerings.

A  report published April 5 calls for the legalization of ICOs and includes clear industry rules and practices that protect investors but also encourage growth.

The task force, Japan’s ICO Business Research Group, includes lawmakers, bankers, and academics.

In the report by the group, which also includes the CEO of Japan’s largest cryptocurrency exchange bitFlyer, it states:

“ICO is still in its infancy and has no industry practices yet.

“Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method.”

ICO operators would be obliged to conduct KYC verification on all contributors, under the proposed guidelines.

The new rules would require operators to offer disclosures to ICO contributors and other investors before starting the offerings.

Regularly updating investors on how the project is progressing along the roadmap laid out in its whitepaper would also be a legal requirement.

Industry-wide standards

Crypto exchanges would have a legal obligation to adopt an industry-wide standard for token listing.

This standard would explicitly classify insider trading related to ICO tokens and prosecute activity as such.

The report indicates that regulators may have to embrace more detailed rules in the future.

Future rules might include regulations designed to “restrict or encourage certain types” of ICO structures.

The FSA (Financial Services Agency) will consider the proposal as soon as this month, according to Bloomberg.

It may take several years for the guidelines to be codified into law, however.

Once introduced, these new regulations would confirm Japan’s status as one of the world’s prime hubs for cryptocurrency and blockchain development.

The country’s regional competitors, China and South Korea, have recently taken a hard line against ICOs.

Given that the report comes at a time when the FSA is ramping up its oversight of the country’s crypto exchange industry, the timing is notable.

The FSA is issuing business improvement orders to a range of domestic cryptocurrency trading platforms.

A handful of platforms announced they would shut down due to being unable to comply with the new rules.