The Financial Services Agency (FSA) of Japan announced a plan to regulate the services of cryptocurrency wallet operators, under which a number of regulatory measures and proposals for their implementation were proposed.
The FSA held the ninth cryptocurrency control meeting, during which it stressed that, according to local law, companies engaged in cryptocurrency activities in Japan, such as buying and selling digital currencies, should be registered as a cryptocurrency exchange in the FSA.
“Wallets are like bank accounts that hold virtual currencies. Cryptocurrency wallet service providers process large amounts of virtual currencies, as do exchange companies whose activities comply with certain laws and rules.”
FSA explained that the current law does not apply to purse service providers, since they do not buy or sell cryptocurrencies, but simply manage them and transfer them to customers. However, since they manage payments, the agency believes that financial regulation is necessary.
The plan presented at the meeting is focused on service providers, not on hardware wallets or software developers for them. Many wallets exist only as a code and do not have a specific manager or company behind them.
“The rules for working with the wallet will comply with international standards for the prevention of money laundering and terrorist financing established by the Financial Action Task Force (FATF).” We will look at FATF standards, including their recommendations for cryptocurrency exchanges, cryptocurrency service providers and ICO issuers”, reports the FSA.
The group also discussed the risks associated with wallets services, such as stealing funds during cyber-attacks, disruptions in wallets, and money laundering.
The regulatory measures include the maintenance of internal control systems, separate management of cryptocurrencies owned by service providers and customers, audits of financial statements, the publication of company policies in the event of theft of funds due to hacking and withholding funds for redemption.
“The time required for the transition to the new rules was also discussed. Only then, can service providers create new wallets, attract customers or issue coins. In addition, they must post notifications on their sites on the status of their registration. Those who refuse to register must declare on their websites that the business will be closed”, the report of the meeting of the FSA control group for the study of cryptocurrency says.