Japan is set to enforce updated crypto laws from 1st May.
The Japanese House of Representatives passed revisions of two already existing laws, The Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA) last year. The new enforcements were scheduled to come in effect in April but due to delays, the official government newsletter announced they were postponed to beginning of May.
Changes in the existing laws range from updating the definitions to tightening restrictions. The first step was to change the basic terminology and use “crypto asset” instead of “virtual currency”.
As part of the PSA, crypto exchanges in Japan will have to manage users’ money separately from their own cash flows, starting 1st May. They will have to use third-operators to keep hold of their clients’ money and use “reliable methods” such as cold wallets.
In case of users insisting on hot wallets, exchanges would have to hold “the same kind and the same quantities of crypto assets” as the users to be able to reimburse them in the event of theft.
The revision of the FIEA will include the concept of electronically recorded transferable rights (ERTRs) to cover regulation on initial coin offerings (ICOs) and security token offerings (STOs) under the act. ERTRs apply to tokens issued in the expectations of profits — i.e. security tokens.
Even though crypto derivatives make up 80% of existing trades in Japan, they are largely unregulated. The new revisions will cover crypto asset derivatives transactions under the FIEA.
In general, FIEA has bans in place against dissemination of rumors, the use of fraudulent methods in buying or selling crypto asset or derivatives transaction.
The regulated measures like the PSA and FIEA may shape Japan as a safe haven for crypto, recent report by Tokyo-based law firm states.
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