Japan’s leading financial authority appears to be gearing up to potentially oversee the decentralized finance (DeFi) industry.
The Financial Services Agency (FSA) has invited stakeholders from the DeFi space to participate in an exploratory survey on the sector.
The FSA aims to enhance its grasp on the real-world dynamics of data management, both “on-chain” and “off-chain,” within decentralized financial frameworks.
The agency has invited potential contributors to express their interest by submitting a “bid” by December 9.
Furthermore, the FSA has announced a “briefing session” scheduled for Friday, December 2, referring to the initiative as a “competition.”
Though this gesture might appear positive for the DeFi industry, past indications hint that the FSA’s primary intention might be to implement regulations for the sector. However, it first seeks to gain a deeper understanding of its operations.
What Signs Are There that Japan Wants to Regulate DeFi?
The FSA holds authority over the cryptocurrency industry and has been granted considerable leeway in making amendments to the nation’s laws. It has already established some of the strictest regulations globally for Japan’s cryptocurrency exchanges, beginning its oversight in 2017. Moreover, the agency has rolled out multiple sets of guidelines tailored specifically for stablecoins.
Historically, the FSA has exhibited a consistent approach when it comes to the crypto sector. Typically, it begins by deepening its understanding of a given sector by initiating “study groups,” often involving stakeholders from the private sector. These groups then produce comprehensive reports. Subsequently, the FSA usually seeks direct conversations with key players from the industry. This process culminates in the agency either releasing guidelines or proposing legislative changes.
To date, the FSA has been relatively reserved in its commentary on DeFi. However, this new “competition” might pave the way for the agency to foster relationships with Japanese DeFi entities, possibly steering it towards regulating the domain in the future.
Earlier in the year, the FSA engaged an affiliate consultancy of the renowned tech powerhouse, NTT Data, to generate an assessment on DeFi’s current state. The endeavor resulted in an extensive 161-page document that was presented to the FSA in June.
Local news source, CoinPost, disclosed that ongoing discussions led by the FSA are exploring other facets of the crypto sphere. Current deliberations aim to elucidate the standards that determine if digital commodities, such as non-fungible tokens (NFTs), fall under the category of cryptoassets.