Japanese Research Group Calls for 'Appropriate' ICO Rules

A research group led by members of Japan's private and public sectors called for ICO regulation and published its recommendations in a report today.

AccessTimeIconApr 5, 2018 at 5:30 p.m. UTC
Updated Sep 13, 2021 at 7:47 a.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

A research group in Japan has put forward a series of proposals related to initial coin offerings, including those focused on investor protection and money laundering prevention.

Spearheaded by a Tama University professor and general advisor Takuya Hirai, a member of Japan's House of Representatives, the ICO Business Research Group features advisors such as Yuzo Kano, the CEO and co-founder of cryptocurrency exchange bitFlyer and includes members drawn from various financial institutions, venture companies, and private-sector businesses. The group was first formed last November.

"Appropriate rules must be set to enable ICO to obtain public trust and to expand as a sound and reliable financing method," the report, released Thursday, reads.

Though not indicated in the Group's publication, Bloomberg Technology reports that the proposals will be considered by the country's financial regulator, the Financial Services Agency (FSA), later this month, with the possibility of eventually becoming law.

In February, a report indicated that the agency is considering the revision of existing laws and regulations to account for token sales. The FSA also issued a warning last October emphasizing the risks associated with ICOs.

Varied proposals

On the question of issuing and selling tokens, the group argued that issuers should provide a means for tracking the development of white papers, in addition to outlining "conditions for the provision of conveniences such as services and rules on the distribution of procured funds, profits, as well as residual assets, to investors of tokens, shareholders and debt holders."

Likewise, the Group recommends that ICOs should be designed "to be acceptable to existing shareholders and debt holders," and should not be used as a means of circumventing traditional financing methods.

In order to protect investors, the authors suggest that token issuers should comply with existing KYC methods in order to assess the suitability of investors and to confirm their identities. They also advocated for measures to prevent insider trading.

"Cryptocurrency exchanges should define and adopt an industry-wide minimum standard on token listing," the report adds, concluding:

"Although there are a wide variety of issues to be considered and it would not be easy to find solutions for all of them. We hope the above proposals would contribute to future discussions by each related party."

The full report can be found below:

2018_ico_en by CoinDesk on Scribd

Japanese flag with coins image via Shutterstock


Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.