The Japanese government seems to be making stringer measures especially as it seeks to legitimise cryptocurrencies and related technology. Japan, through its financial regulatory authority has set guidelines for the legalisation of Initial Coin Offerings (ICOs).
We all know that an ICO is a way of raising capital by issuing and selling newly minted coins in exchange of other coins such as Ethereum and Bitcoin. The government of Japan funded a research group by the name the Centre for Rule making Strategies (CRS) to put in place rules that will enable ICO to stand as a sustainable financing method. The research group through its report created guidelines that will help ICOs to gain the public trust.
It is interesting to note that most ICOs are unregulated in many countries in the world and this makes investors to be vulnerable compared to other regulated assets such as stocks. This means that Japan is actually making great steps towards regulation and legitimising ICO markets to avoid such cases and scenarios.
Some of the proposed guidelines that the country is working towards is to identify the investors so as to prevent cases of money laundering and also restricting unfair trade.
Initial Coin Offering (ICO)
It is also worth noting that Japan’s ICOs guideline is totally different from that of countries such as South Korea and China which decided to ban the practice of ICO due to fraud that was taking place in their respective countries. The report also avoids in identifying ICOs as financial securities.
“ICOs are groundbreaking technology so if we can implement good principles and rules, they have the potential to become a new way to raise funding,” said Kenji Harashima, who is a researcher at Mizuho Research Institute.
The research group that has been tasked by the Japanese government is lead by Takuya Hirai who is also a member of the ruling Liberal Democratic Party. Mr. Takuya was also in a team that saw the legalisation of cryptocurrency in Japan in 2017. The research group also included Mr. Yuzo Kano who is the head of the nation’s largest Bitcoin exchange called bitFlyer and also serves as a member of the largest banks. Another member of the research group was Toshifumi Kokubun, a professor at Tama University.
The government funded research group came up with some few models that would help describe the variant ICOs. The first one that was proposed was to have a Venture company type where fund raising is done through venture companies through high risks and a high return on investment. The second proposal was to have an eco-system type where fund raising is done in a collective effort in which multiple corporations are engaged.
The third type that the research group proposed was what is called the large company type where fund raising is done by companies for certain projects that are in-house. A closer look at the research shows that there are prospects for the future of the ICO market.
Japan’s move to legitimise the ICO market is a steady move towards monitoring the best ICOs that will remain strong in the market and the once that will be best to invest in. One of the key ingredients that will help investors is to do due diligence and also reading white papers and knowing the rules that govern ICOs in a particular country. It should not be a strange to learn that the Japanese government has legitimised ICO markets with increased regulations.