The Initial Coin Offering (ICO) market in Japan has witnessed much activity quite recently. Many Japanese who are conversant with cryptocurrencies are exchanging their well-known coins such as Bitcoin, Ethereum and Litecoin for ICO coins. People are trying to spread their crypto-risks by diversifying their portfolio to include ICO tokens. Another motivation for this increased appetite for ICO assets is the possibilities of making some good profits as seen with some ICO tokens which have recorded impressive performances and sometimes even surpassing the rate of appreciation for Bitcoin and other main cryptocurrencies. In a recent survey, it was gathered that about 2.7% of the 127 million Japanese population had at a point in time purchased bitcoin – this translates to 3.4 million Japanese. The same survey shows that about 2% of the population is still holding onto the cryptocurrency.
The Japanese corporate and startup space are not left out of the ICO action. Quite recently, it was reported by news.Bitcoin.com that Japanese internet giant GMOis planning to launch an ICO. It also, indicates that other Japanese companies like financial service provider SBI Group is planning to launch an ICO to assist it in expanding its operations.
ICO Regulation in Japan
The Japanese Financial Services Authority (FSA) has warned of the risks of ICOs. The FSA gives hints of the possibilities of future regulation in the ICO market.
In November of this year, the Japanese Financial Authority warned of risks associated with investing in ICOs. The FSA particularly touched on two notable risks; the first is with the price volatility that pertains with these tokens and the second is the possibilities of some ICO projects being fraudulent.
The Financial Regulator emphasizes the need for ICO investors to be wary of the aforementioned risks; it asks that people do their own due diligence and not just rely on the fine prints that are presented within project whitepapers and websites.
As things currently stand, there are no specific Japanese laws governing ICOs but the authorities might activate laws to streamline the activities of local businesses that intend to launch an ICO. The FSA document says that “ICOs may fall within the scope of the Payment Services Act and/or Financial Instruments and Exchange Act depending on how they are structured”