Japan’s major stock exchange operator is considering new limitations on publicly traded businesses that focus their principal business on purchasing and storing cryptocurrency, indicating a potential shift in one of the most active marketplaces for digital-asset treasury (DAT) firms, Bloomberg reported.
Crypto restrictions in Japan
Bloomberg cited unnamed people with knowledge of internal discussions, saying that Japan Exchange Group (JPX) is considering more stringent oversight for businesses that convert their primary operations into extensive cryptocurrency collection. This entails imposing backdoor-listing regulations on such businesses and introducing new audit procedures.
The action was taken in response to a wave of losses that struck Japan’s DATs earlier this year, many of which drew in ordinary investors.
The shares of Metaplanet, the biggest DAT in Japan with over 30,000 Bitcoin, dropped from a year-to-date high of $15.35 on May 21 to $2.66 at the time of writing. From its peak value this year, this represented an 82% decline.
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The back door listing rules
Japan’s listing requirements would be significantly tightened if backdoor listing regulations were applied to businesses that switched to cryptocurrency accumulation.
JPX currently forbids backdoor listings, which happen when a private business buys an already-listed shell company in order to avoid the conventional initial public offering (IPO) process.
A regulatory loophole that some DATs may have taken advantage of to change their business models would be closed if the ban were extended to listed companies that switch to crypto-holding vehicles. T
he listing process for new DATs may be slowed or stopped if JPX expressly prohibits such pivots.
There are currently no general regulations on the stock exchange that prohibit listed corporations from accumulating cryptocurrencies. But according to a Japan Exchange Group representative, the company is monitoring companies that raise concerns from a risk and governance perspective, with a view to protecting shareholders and investors.
Japan and Crypto
JPYC, a fintech company based in Japan, declared the launch of JPYC, the first stablecoin with legal recognition and yen pricing. JPYC Inc. said in a press release that it will start issuing the JPYC token soon, along with unveiling its specialised issuance and redemption platform, JPYC EX. The company registered as a fund transfer service provider with Japan’s Financial Services Agency in August.
Also, a major regulatory reform proposed by Japan’s Financial Services Agency (FSA) may place cryptocurrencies outside of the Payment Services Act and under the Financial Instruments and Exchange Act (FIEA).
They said that many of the problems facing the cryptocurrency industry, such as fraudulent disclosures, unregistered companies, fraud, and inadequate security measures, had characteristics more like past problems dealt with securities legislation.
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