A Japanese Financial Services Agency (FSA) spokesperson revealed a plan for acquiring full control over the manner in which crypto wallet providers conduct their daily activities. The measures however are not yet implemented, as of press time.
Some of the regulatory measure discussed include "management of cryptos of service providers & customers, maintaining funds to repay customers, audits of financial statements, maintenance of internal control systems and publication of various policies when money is stolen through hacks."
Before looking at the brass tracks of FSA proposals, it's good to know that the regulatory body recently completed its 9th annual crypto research group meeting.
From the group's findings, one of the key aspects of interest for the FSA is the manner in which the cryptocurrency wallet sector functions at this time since the industry is not regulated.
Based on this, the study revealed that:
"Wallets are like bank accounts that store virtual currencies. While wallet service providers handle large amounts of virtual currencies like exchange companies they are not targeted by laws and regulations."
The FSA spokesperson said that the present scope of Japanese legislation doesn't at all apply to wallet service providers since they don't directly deal in the trading of digital assets. However, these entities deal with bulk payments and the FSA believes that they should also be using the existing financial regulations as other businesses are doing.
According to the plan, strictly cryptocurrency wallet providers will now be subject to these new rules.
The FSA further discussed the different risks associated with crypto wallet services such as money laundering, cyber attack, wallet failures, etc.
The FSA has not set an actual date for implementing the above rules but it has set a transition period for announcing these regulations. The FSA said that during that period, all wallet operators won't be allowed to add new users, businesses, coins to their relevant platforms and they are requested to issue notices on their official websites about "registration status."