The Financial service agency of Japan has hinted it may be preparing to police DeFi as it is currently pointing the searchlight into Decentralized Finance Projects.
Japanese regulator looking into DeFi
The Japanese Financial Services Agency has announced intentions to conduct a fact-finding survey and competitive bidding on Decentralized Financial System. According to a recent report on CoinPost, the FSA has invited DeFi players to participate in a “fact-finding survey” on the sector to help the agency understand the “actual conditions” surrounding on-chain and off-chain data management in decentralized financial systems.
Last week, the Japanese FSA made its intentions public via a public notice titled “Research on grasping the actual situation using on-chain / off-chain data in decentralized financial systems”. As announced by the FSA, intending participants will be able to access the guidelines for participation and register their interest in the form of a “bid” via email by December 9, 2022.
FSA to hold virtual briefing on friday
In addition to its fact-finding survey, the Japanese Financial Services Agency is also planning to hold a briefing session on the “competition” in the form of video distribution on Friday, December 2nd. The FSA has asked those who wish to participate in the web conference to send an e-mail to the specified address by 16:00 on Thursday, December 1st. However, participation in the explanatory meeting is not mandatory for competitive bidding.
The FSA’s DeFi probe comes on the heels of a similar move by Japan-based Quine. Most recently, QUNIE Co., Ltd., a Japanese IT consulting firm that provides consulting services for NTT DATA, researched technological risks in the trust chain of decentralized financial systems. After the survey, an extensive 161-page report was released by the Financial Services Agency in June. The study was based on the assumption that major DeFi projects have certain “trust points (centralized elements that users have to trust unconditionally)”, representative DeFi protocols case analysis and interviews with relevant parties.
How does FSA’s survey imply an attempt to regulate DeFi?
The FSA regulates the crypto sector and has been effectively given carte blanche to make legislative changes to the country’s law. It has already imposed some of the most rigid rules in the world on the nation’s crypto exchanges, which it began supervising in 2017. It has also issued several sets of stablecoin-specific guidelines.
Also, in October, the Financial Services Agency announced a policy to promote the establishment of rules regarding the guidelines for “digital assets” used in Web3 (Web3) in financial and administrative policies. Discussions are underway to clarify the criteria for judging whether digital items such as NFTs (non-fungible tokens) fall under crypto assets (virtual currencies) and financial transactions. With its new move towards DeFi, the FSA will likely make rules to regulate the sector.