Japan Brings Major Changes into Cryptocurrency Regulation: Key Points You Should Know
Originally published on: CoinSpeaker
Read the original article
March 15, 2019
As the crypto industry is developing rapidly, countries are seeking various ways to regulate digital currencies that have already become an essential part of some national economies. Japan is no exception. This highly developed country always reacts quickly to any initiatives and tries to be the first when it comes to innovations.
The Japanese government has decided at a cabinet meeting to introduce some amendments to the Financial Instruments and Exchange Law as well as the Fund Settlement Act. These amendments address virtual currencies and aim to intensify crypto trading restrictions.
The Financial Instruments and Exchange Law is the main statute codifying securities law and regulating securities companies in Japan. It ensures security for investors and promotes the transparency of markets by setting strict rules for stocks and shares, bonds, and financial derivative transactions.
As Nikkey.com has reported, the revised proposal contains several key points. Firstly, now the names of digital currencies will be changed to “cryptographic assets”, which goes in line with the expressions used in 20 countries and regions (G20) meetings. Secondly, it will protect assets in preparation for repayment in case of customer asset outflows.
It is notable that the revised bill does not suggest having a force that obliges individual exchange traders (virtual currency exchanges) to name cryptographic assets. A lot of businesses have already been registered in ‘virtual currency’, and that’s why all of them will have to decide whether to change the company’s name or not.
Further, the revised bill states that customer’s virtual currency should be managed by means of a cold wallet and if managed on the net, the currency must be backed by financial resources. Margin transactions are to be regulated as foreign exchange evidence (FX) transactions.
The law also prohibits advertising that encourages speculation, forbids unfair trade including price manipulation and calls for informing about changing the company’s cryptocurrency in advance.
According to the Financial Instruments and Exchange Law, clarified issuance of tokens is to be regulated by the Financial Instruments and Exchange Act. Moreover, the law maintains information disclosure for investors and restricts sales for token intermediaries.
Some History of Crypto Regulation in Japan
Japan got down to strengthening crypto regulation after numerous cases of fraudulent ICOs had taken place. In April 2017, the Japanese Financial Services Agency introduced a registration system to virtual currency exchanges, making Japan the first country with such an initiative. The aim of this system is to develop appropriate cryptocurrency regulations and overcome such problems as hacking and money laundering that have spread among exchange traders.
In March last year, the Financial Services Agency cracked the whip on seven exchanges for failing to comply with anti-money laundering and security procedures. Then FSA held an expert conference to consider tightening regulations. Fraud, hacking, and other illegal actions were hotly discussed and it was decided that the crypto policy does need proper and scrutinous control over digital assets.
The recent amendments to the Financial Instruments and Exchange Law and the Fund Settlement Act clearly demonstrate that the government is dead set on the policy regarding cryptos and those involved in this industry have enough reasons to worry about.