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The Japanese Financial Regulator released a notice warning users of the risks associated with investments from the OIC.
The Japan Financial Services Agency (FSA), the country's regulatory and supervisory agency, issued a statement focused on initial coin offerings on October 27 for users participating in ICOs and companies who propose them.
For users, the statement pointed out the "high risks" surrounding the initial offers of coins, in particular – the volatility of the issued tokens and the likelihood of fraud by the operators of the OIC. "The price of a token can drop or become suddenly worthless," the FSA said in its warning. "[T] there are possibilities that the projects in document [white] are not implemented, or that the goods and services provided are not actually offered," the statement added, highlighting the potential for fraud in the sector. "Frauds taking advantage of ICOs are reported in the media."
The regulator added:
You should have an agreement [invest] at your own risk only after you have sufficiently understood the risks [as explained] and contents of an ICO project if you buy a token. You should also pay particular attention to the suspicious solicitation on IFAs.
The general ban on ICOs by China has resulted in the exodus of startups seeking to list tokens in neighboring Japan, a more friendly jurisdiction for crypto-currencies where bitcoin has been officially recognized as a means legal payment earlier this year. "We are getting hundreds of applications from startups and Chinese startups around the world asking us to list their brands after the Chinese government banned ICOs," said Japan's Kagayaki Kawabata, head of international business development.
For startups and companies launching symbolic sales, the FSA statement noted that "ICOs may fall within the scope of the Payment Services Act and / or the Financial Instruments and Exchange Act" . Symbolic selling is required to comply with related laws and regulations, including the registration of symbolic sales, the absence of which exposes them to criminal penalties.
Tokens that are classified under the Payment Services Act will also make exchanges supporting the registration of these tokens mandatory at their local finance offices. Similarly, if an ICO has characteristics similar to those of an investment in which "the purchase of a token by a virtual currency is virtually considered equivalent to that by a legal tender," the sale symbolic will have to operate according to the rules of Financial Instruments and Exchange Act.
Japan's FSA, which has set up a 30-member team specifically to monitor cryptocurrency exchanges in the country, has granted special licenses to allow 11 bitcoin exchanges to operate legally in the country on a monthly basis latest.
Japanese FSA image of Shutterstock.