The Financial Services Agency (FSA), Japan’s top financial and cryptocurrency regulator, recently published a report pertaining to decentralized finance (DeFi), blockchain and digital assets.
The authors of the report concluded that there may be a need for the country to come up and eventually establish regulations for the DeFi space.
According to Coin Post, the publication was the second from the FinTech Innovation Hub, FSA’s working group that was created by FSA back in 2018 with the aim of identifying new business avenues and trends in the fintech and blockchain field.
What the report’s function is
Essentially, the main function of the report is, to sum up, developments and meetings that were held in the Asian nation or virtually over the past few months.
In doing so, it will create some sort of an executive summary of key meetings for regulators that can be accessed at a glance.
However, the working group that created it said it was “proceeding with discussions and document formulation” in the DeFi space, claiming that regulators must understand more about the community trends as well as the development of DeFi technologies, governance mechanisms and the prospects for further progress of decentralization.
DeFi regulations coming
The authors of the paper also shared that future regulations would likely be imposed and that discussions about the space have already started within the Financial Services Authority.
They also added that such discussions were happening not only in DeFi deliberations but also in the wider crypto sphere, including the crypto custody sector.
Meanwhile, the FSA explained its stance on DeFi, saying, “A decentralized financial system based on blockchain technology has the potential to enable peer-to-peer (P2P) financial transactions without the need for intermediaries.”
It also added that although this kind of decentralized financial system can offer a variety of opportunities and benefits, it could also undermine policymakers’ ability to enforce existing regulations.
Image courtesy of Cointelegraph News/YouTube
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