Japan Is Planning To Legalize Initial Coin Offerings

Japan is moving ahead to legalize initial coin offerings while other countries like the US and China are restricting the fundraising technique to save their investors from the existing risks.

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Japan has a well-known standing as a global home for cutting-edge tech and innovation. It was the only important economy to present legitimacy on digital currencies by considering it as legal tender in the month of April 2017.

ICOs in Japan

In the last couple of years, initial coin offerings are drifting as a new method of raising capital and investment.  But, it should be on a note that the tax/accounting issues associated with ICO remain unclear. In certain cases, there are insufficient measures for protecting investors. Therefore, such issues are in the list above are considered challenging throughout the world.

Therefore, favorable measures must be established to help investors inject a level of trust into ICOs. By considering the existing issues, ICO Business Research Group was established. It was consisting researchers from different sectors including financial institutions, non-financial institutions, and venture companies.  

Hence, the research group released the rules to establish ICO as a sustainable financing method.

Japan’s new guidelines revealed

Research group presented two imperative issuance principles intended for addressing confusions around ICOs. These principles were outlined by the perspective relates to the innovativeness and the flexibility of ICO along with the outlook for investor protection:

  1. Issuers should define and disclose conditions for the provision of conveniences such as services and rules on 5 the distribution of procured funds, profits, as well as residual assets, to investors of tokens, shareholders, and debt holders.
  2. Issuers should define and disclose a means for tracking the progress of white papers.

Additionally, the report disagrees that whitepaper must be updated as the organization progresses.

The report said

“The above is based on the idea that issuers need to explicitly define in advance a means to allow token investors to confirm the progress of the plans stated in the white paper. In addition, white papers need to be managed in a highly transparent manner. For example, procedures for revising white papers are defined, a revision history is available for viewing, and so on”.

Furthermore, research group proposes the guidelines on requirement related to practical operations.  

[Guideline 1] ICOs should be designed to be acceptable to existing shareholders and debt holders

[Guideline 2] ICOs should not become a loophole in existing financing methods as equity finance

Specifically, their guidelines are designed to track the identification of the investors alongside the prevention of money laundering as the top priority.

For the time being, the projected set of laws will be evaluated by Japan’s FSA. Hence, Japan is quite different from other Asian countries such as South Korea, China, and Thailand. However when it comes to cryptocurrencies and initial coin offerings.

The Central bank of Japan – It’s important to try using cryptocurrencies   

The central bank of Japan has unveiled some significant view in a newly-published general Q&A on cryptocurrencies like Bitcoin.

The central bank has officially stated for one of the important queries on banning cryptocurrency.

“To that end, it is important to actually try it in the world. There is a reason to believe that [its maturity] will allow us to use existing cryptocurrencies, accumulate use cases and promote further technical development.”

How will these guidelines affect other countries if they introduced the same? Follow us on Twitter and Telegram

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Mustafa Mulla

Mustafa has been writing about Blockchain and crypto since many years. He has previous trading experience and has been working in the Fintech industry since 2017.

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