The Japanese Ministry of Finance, in correlation with the Kanto Finance Bureau, urged clients to exercise caution when engaging with brokerages or affiliates without proper regulation. This follows after an increase in unregulated FX Companies within the Japanese blockchain market, with this finance bureau citing the AAFX Trading Company Ltd. This brokerage doesn’t have the proper licenses required for operation in Japan, with their CFD and FX products established in the Grenadines and Saint Vincent.
The AAFX Trading Company isn’t the only brokerage blacklisted by the Kanto Finance Bureau and Japanese Ministry of Finance. The majority of offshore brokerages providing IP access to consumers in this region are blacklisted, with notable brands including VFSC and Globe Pro. Unfortunately, Japanese traders use VPN technologies to bypass the blacklisted websites. It’s resulted in hundreds of clients losing access to their CFD contracts or FX trades.
The Japanese Ministry of Finance has urged these brokerages to begin execution orders for regulation. This would ensure that the appropriate measures are taken to guarantee offshore brokerages compliance to the Japanese code of conducts. Under previous legislation, these firms would be required to open offices in Japan, which would add a level of cost that VFSC and Globe Pro have both expressed they won’t pay.
The Struggles of Regulation
It should be noted that the Japanese Ministry of Finance and the Kanto Finance Bureau are trying to bully these operators into a legalized investment on their blockchain industry. All blacklisted operators under the Kanto Finance Bureau have operational licenses in other jurisdictions, with most being from Malta or Belize. Most clients haven’t experienced financial hurdles with these respective brokerages, with difficulties being faced because of Japan’s unwillingness to recognize international commercial licenses. This hasn’t been an issue with standard finance markets working through global stock exchanges. It indicates an overwhelming sense of control over the blockchain industry, which has prompted significant concerns for local and international traders.
Citations regarding the Japanese code of conduct were listed for valid reasoning towards the blacklisting of these websites. Market analysts believe that the “Financial Instruments and Exchange Act” in Japan, allows for increased safety for traders. The downfall is the limitations imposed towards growth, with minimal brokerages being accepted into the Japanese blockchain industry. This creates a problem where offshore regulators could lose an entire market by trying to be licensed under the FIE Act. The Japanese Ministry of Finance must alter their blockchain legislation to see formidable growth moving forward into the 2020s.