On September 3, the Financial Services Agency (FSA) of Japan announced that they have received fewer inquiries related to cryptocurrencies in the last quarter as compared to the previous one. This is the fifth straight quarter that the number of enquiries has decreased according to the country’s financial regulator.
In comparison to the previous quarter, the number of inquiries dropped from 574 to 494 in just three months. The decrease seems to be centered around the crypto depression that has been in effect over the last eight weeks. This has seen a decline in the value of these currencies while increased regulation by Japanese authorities tightens.
According to the news outlet Financefeeds, the data by the FSA clearly points to a disturbing pattern. “The number of inquiries about investment products grew from 1,999 to 2,164 in the second quarter of the year. If sorted by product, 406 (18%) of the inquiries related to listed shares, 232 (10%) related to FX, and 152 (7%) related to investment trusts.”
The Japanese FSA has been increasing regulation since the beginning of 2019. For example, in January, the regulating authority announced that they would be planning a new round of regulation directly related to the digital currency sector. The focus of this particular regulation was targeting firms who had not previously been regulated by the agency. They had fallen under an exemption in the Financial Instruments and Exchange Act, but the FSA moved to close that loophole.
This has become a growing pattern in Japan. The FSA has been increasing its regulatory power, thus leading to a depressed digital currency environment.
This information is fueling anxiety among cryptocurrency investors and exchanges. With fewer people and organizations asking for information related to cryptocurrencies, it is showing that there is a decreased interest in the digital assets. This will not only likely mean that there will be fewer people who are looking to purchase or trade in these currencies, but it should have a direct impact on exchanges as well.
The problem is that there appears to be no mechanism in place to do anything to alter this trajectory. The FSA continues to increase regulation related to cryptocurrencies, despite the fact that there is a diminishing interest in the currencies.
This has insiders worried. With neighboring countries such as Singapore and Thailand seeming to be more amenable to these exchanges and services, it may not be long before many within Japan opt to take their assets to other countries in the region.
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