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A working research group endorsed by Japan’s government has proposed new guidelines intended to legalize and regulate ICO(Initial Coin Offering).
In recent years, ICO which is a tool for issuing tokens in exchange for cryptocurrency, has drawn attention as a new way of capital raising and investment. However, its legal position is unclear and tax/accounting issues related to ICO remain in a large scale. In some cases, measures for investor protection are not sufficient. Such issues are considered problematic throughout the world.
ICO has no experience in the industry practices yet. So, the starting point of the research group catches on. They publish on April 5, 2018 a report with some appropriate guidelines useful to enable ICO to obtain public trust and to expand it as a new sustainable financing method.
“For the permeation and development of ICO, it would be desirable to set rules on “issuance of tokens” and “trading of tokens in the issue market.” As for the purchase and sale of tokens in the trading market, there are certain rules set force in the Payment Services Act. However,there are no laws or regulations stipulating explicit rules for issue markets, which leads to cases of misunderstanding between parties and cases of investors being left without protection” the research group wrote.
At the end of the report researchers said: ” To enable ICO to be used safely by a wide range of issuers and investors and to be accepted well in the society, more detailed rules may be required”
According to Bloomberg, the Financial Services Agency (FSA) will consider the proposal as soon as possible, and could eventually become law although it may take several years. Once adopted, these norms would surely reinforce Japan’s status as one of the world’s leading cryptocurrency and blockchain development hubs. All this is in a stark contrast to positions taken by South Korea and China, which banned the practice this past year, invoking fraudulent fundraising and excess speculation.
All we need to do now is to wait for more information and implications.
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