Japanese regulator report suggests DeFi regulations may be coming

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Japan’s main regulator of the financial and crypto sector, the Financial services agency (FSA), released a report on DeFi, blockchain, and crypto – with its authors concluding that there may be a need for the nation to develop regulations for the decentralized financial sphere.

the report was the second of the FinTech Innovation Hub, a working group created by the FSA in 2018, through Currency post. The main focus of the group is to identify new avenues and business trends in the fintech and blockchain space, rather than the creation of policies per se – but the report is nonetheless likely to influence the thoughts of executives. of the FSA who formulate the policies.

The main function of the report is to summarize developments and meetings held in Japan or virtually over the past few months – creating a sort of summary of key meetings that regulators can access at a glance.

But the group wrote that it was “continuing discussions and formulating documents” in the DeFi space, and said regulators should better understand community trends, the development of DeFi technologies, governance mechanisms and more. the prospects for progress in decentralization in space. .

The authors of the article also added that “future regulations” would likely be imposed and that discussions about space were underway within the FSA. And they added that these regulatory discussions are taking place not only in DeFi’s deliberations, but also in the broader crypto sphere, including the crypto-custody industry.

The FSA explained its position on DeFi as follows:

“A decentralized financial system based on blockchain technology has the potential to enable peer-to-peer (P2P) financial transactions without the need for intermediaries. While this type of decentralized financial system can offer a variety of opportunities and benefits, it could also undermine [policy-makers’] ability to enforce existing regulations.

The FSA began to seriously control the crypto sphere in 2017, when Japan became one of the first countries in the world to adopt a permit-based system for crypto exchange operators. The agency has since tightened its control over the sector following the Money check hack from early 2018, and holds regular policy-making sessions – often involving members of the national blockchain and crypto industries.
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Learn more:
– Bank of Japan identifies pros and cons of DeFi, mentions Uniswap, Yield Farming
– Japanese Pro-Crypto MP outlines his vision for crypto and the future of NFT regulation
– DeFi had a solid year 2021, driven by new trends and new paradigms

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