Japan’s FSA reports sharp drop in cryptocurrency inquiries

Compared with 1,231 crypto-related inquiries received in the third quarter of 2018, only 788 were received by the regulator in the fourth quarter. This is revealed in a report with the translated title "Status of inquiries and other communications received by the counselling office for financial service users", which includes data on the number and details of inquiries and other communications received by the Counseling Office for Financial Service Users in the fourth quarter of 2018.

When considered over a longer period, this downward trend is even more pronounced — with the number of total crypto-related inquiries falling almost 78 percent since the first quarter of 2018, when the Counselling Office for Financial Services Users registered 3,559 cryptocurrency inquiries.

As might be expected during a crypto bear market, the percentage of crypto inquiries is getting smaller, while the number of inquiries relating to the legacy financial system remains relatively unchanged. The counselling office received 9,431 general non-crypto inquiries in the fourth quarter, compared with 9,364 non-crypto inquiries in the third quarter.

A broad range of different crypto-related inquiries have been made to the agency. Of the total 788 inquiries in the fourth quarter, 235 (29 percent) were general inquiries, while 228 (28 percent) related to the results of individual transactions or contracts. A total of 69 (9 percent) inquiries related to industry organizations, including the Japan Virtual Currency Exchange Association.

Fraudulent investment is highlighted by the report as a key concern among the Japanese public, with 227 inquiries made concerning the possibility of fraudulent investment, a figure that includes 164 cases with claims related to damages suffered by investors. As an example of how these might be resolved, the report gives the example of the inquiry: "I have been solicited to purchase cryptocurrencies and I want to know if the exchange is trustworthy."

In response, the FSA encourages the enquirer to check if the exchange is registered with the FSA or Finance Bureau, with the caveat that simply being registered does not ensure trustworthiness, and that users should fully understand the various risks involved.

Despite the drop in inquiries, crypto business in Japan continues to grow, and five new exchanges joined the country’s Virtual Currency Exchange Association last month.