The Japanese financial watchdog, the Financial Services Agency categorically refused to approve listed derivatives based on cryptocurrencies. The agency, however, may approve exchange-traded funds that track cryptocurrency assets, according to an insider.
The Japanese Financial Services Agency May Allow Crypto ETF
The Japanese Financial Services Agency (FSA) reached a conclusion not to approve cryptocurrency futures. The decision, however, is a major setback to the industry and cryptocurrency enthusiast. Majority of the community are already hopeful that such moves could usher in new future of institutional investors for cryptocurrencies. However, the agency showed a willingness to approve Cryptocurrency ETFs tracking digital asset in the country. This move could revive the hopes within the cryptocurrency community.
The FSA recently revealed that it is gauging industry interest in ETFs tracking digital currencies according to an inside report. The decision to abolish cryptocurrency futures, listing stem after the agency refused to revise a law that stood against it. However, the agency explained that cryptocurrency futures could not compete with the existing stocks market.
The FSA reached the conclusion to abolish cryptocurrency futures after conducting an internal investigation of the crypto exchange heist. The investigation that lasted for a month was meant to explain how Coincheck exchange was hacked and $600 million stolen. Furthermore, the agency gave more authority to self-regulatory bodies to control the cryptocurrency space in the country.
Japan Could Have A New Financial Regulation Bill By 2020
The success of the agency in abandoning changing law that could allow cryptocurrency futures legal listing could produce a new financial bill. The bill which is expected to become a law by the year 2020 could be high backed by the recent conclusions of the FSA. The new bill aimed to amend securities legislation through the financial Instruments and Exchanges Act. However, insiders report reveal that some of FSA’s recommendation could result in changing the payment services act.
The cryptocurrency community and industry at large think that the introduction of cryptocurrency futures could bring in institutional investors to crypto. Just about a year ago US startup firms Cboe Global Markets Inc. and CME Group Inc. listed futures tracking Bitcoin. The US listing attracted growing but still limited demand from institutional investors to cryptocurrency. According to exchange data, the demand for cryptocurrencies from institutional investors stands at just $81 million.
Many in the cryptocurrency industry believe that ETFs is the only hope that could restore cryptocurrency. Additionally, the industry believes that ETFs will appear more legitimate in the eyes of some investors with big money. However, the US and European regulators so far refused to approve dozens of Bitcoin ETFs. The major issue cited for the refusal is the possibility of price manipulation of cryptocurrencies.
At least one exchange in Switzerland, Amun Crypto Basket Index ETP is already running cryptocurrency ETF. The Amun crypto ETP trading under the ticker HODL launched in November 2018. So far the exchange-traded project attracted at least $6 million with a daily turnover less than one million. Obviously many investors are supportive of trading in commodities underpinning ETFs.
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