Japan is moving toward legalizing initial coin offerings, even as countries such as China and the U.S. restrict the fundraising method because of the risks it presents for investors.
A government-backed study group laid out basic guidelines for further adoption of ICOs, including rules for identifying investors, preventing money laundering, tracking progress of projects and protecting existing equity and debt holders, according to a report published on Thursday. The proposals will be deliberated by Japan's Financial Services Agency later this month, and could later become law.
The ICO-friendly guidelines are in contrast to positions taken by China and South Korea, which last year banned the practice citing fraudulent fundraising and excess speculation. The report also avoids clearly identifying ICOs as financial securities, a point which the Securities and Exchange Commission in U.S. has argued makes some ICOs subject to strict securities laws.