InvestmentFinancial Services Agency to Change Guidelines Within the Year to Ban Cryptocurrency Investment Trusts

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The Nikkei Shimbun reported on November 5 that the FSA has adopted a policy to prohibit investment trusts that invest in crypto assets (virtual currency) during 2019.

At the end of September 2019, the Financial Services Agency announced a partial amendment of the “Comprehensive Supervisory Guidelines for Financial Instruments Business Operators.” According to the announcement, investment trusts and investment corporations (of which investment trusts are one type) are mainly intended to invest in specific types of assets, and new types of assets could, in the future, be included. He explained that it should consider matters regarding the composition and sale of investment trusts.

At the time of the announcement, the agency stated that there are times when, in regard to crypto assets, it encourages speculation, although it is expected that financial products targeting crypto assets will be formed in the future, and the agency said that it should “carefully handle the creation and sale of investment trusts that invest in such assets.”

In Japan, investment trusts that invest in virtual currencies are not currently sold, but it seems that by restricting their sale before they have become commercially-available products, excessive inflows of funds into virtual currencies with weak price movements will be suppressed. According to the Nikkei Shimbun, “Supervision guidelines are not law, but the FSA shows its way of thinking when checking related businesses, and it is practically a compelling force. According to the guiding principle’s revision, in Japan, the commercialization of investment trusts that target cryptocurrency, will, in reality, disappear.”