Yesterday, Japan’s Financial Services Agency (FSA) announced the launch of the Blockchain Governance Initiative Network (BGIN) to enable collaboration and dialogue between stakeholders.
The governance council will operate as an international body and is inviting others to join the open network. Initial contributors to the council are members of global financial associations, blockchain firms and academia.
The FSA said BGIN was formed under the guidelines set by Japan at the G20 on governance and regulatory frameworks for decentralized finance. The new governance council was revealed at the “BG2C – Special Online Broadcasting Panel Discussion”, organized by FSA and Nikkei.
Toshihide Endo, Commissioner of the Japan Financial Services Agency said his organization is an early adopter of regulations for cryptocurrency exchanges and anti-money laundering (AML) controls. As a result of hacks at exchanges and ICO scams, regulation has been extended, including Security Token Offerings (STOs).
The FSA is particularly concerned with technical vulnerabilities in blockchain networks. As an aside, last month IOTA suffered a serious issue with its wallet and took part of the network offline. With a fully decentralized network, that’s not feasible.
Endo outlined his concern: “Decentralized financial systems contain these cipher compromises and risks. It means there is a vulnerability of this encryption on the crypto-asset systems.”
He continued: “In order to tackle these situations, the regulator alone is not enough. We have to collaborate with the other players, including the technology communities and academia, in order to keep it safe for customers.”
Previously, the FSA has conducted the blockchain ‘Multilateral Joint Research Projects’ and the ‘Blockchain Roundtable [BCRT]’ along with other financial regulators.
Japan is experiencing tremendous activity in the blockchain space, especially for tokenized securities.
While the Bank of Japan has no immediate plans for a CBDC, it is exploring the premise for benefits and cons.