Japanese Officials Introduce New Amendments in Japan’s Crypto Laws

Last year two of legislation were passed by the Japanese House of Representatives - The Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA), as a result Japan will be enforcing new cryptocurrency- related regulation.

Originally new legislations were scheduled to come into effect in April, but due to a COVID-19 pandemic delay the final enforcement date has been officially pushed to May 1st, 2020.

Although there are no laws to regulate crypto in Japan, amending existing regulations is the only way at this time for digital assets to have any kind of legal status in the Asian nation.These will bring significant changes in the operation of crypto businesses in the country. The new crypto exchange-specific amendments add clarity to the market and introduce a number of important customer protections.

According to new changes in regulation all exchanges must now keep in cold storage an amount equal or greater than the number of users’ funds held online. Regulation ensures that exchanges rely on cold storage whenever possible. Along the same line of thought, exchanges are no longer allowed to keep users’ funds and their funds together. Importantly, this regulation extends across both crypto and fiat reserves.

As part of the of the enforced policies, the new regulations place cryptocurrency asset derivatives transactions under the FSA’s jurisdiction. Additionally, the updated regulations have refined terminologies, calling them “crypto assets” instead of “virtual currencies” or “cryptocurrencies”.

Another important amendment added to the regulations is the legal definitions of initial coin offerings (ICOs) and security token offerings (STOs). For years, blockchain firms struggled to get regulators to clarify the exact differences in terms of regulations. Now, regulators have a clear understanding of what type of fundraising campaign is underway, and how to classify it.

The new amendments go after different forms of market manipulation. Regulation stipulates stricter fines in place for spreading rumors, making false statements and any fake news regarding. With stricter condition officials try to limit fake businessmen and eliminate bad sources of information. This is an important addition as market manipulation is a real concern internationally.

Despite the dreary state of the international markets, the new crypto regulations in Japan can help the crypto industry grow in the Asian region and Japan could be the blockchain capital of the region. This determination, coupled with regulators forward-looking stance, is sure to give the country an advantage over the competition as several other countries are also working on enforcing the Financial Action Task Force (FATF) guidelines to regulate cryptocurrencies.

Regulatory measures like the FIEA and PSA may help Japan stand out as a safe haven for crypto. In order to tackle ICOs and STOs, regulators included the concept of electronically recorded transferable rights (ERTRs) under the FIEA.

Despite the fact that Japanese officials have introduced amendments into local crypto legislation, Offshorelicenese team are ready to assist to our clients with Japan Crypto license obtaining according to new legislation requirements.

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