The Japanese House of Representatives had passed two legislation to regulate the crypto industry in the country. The legislation were scheduled to come into effect starting in April, but due to unexpected delays, no enforcement date was announced until last week. The regulations will go into place starting next month to regulate cryptocurrencies. Currently, there are no specific laws in Japan to regulate the crypto industry.
Revised Payment Service Act will be implemented in Japan
According to the official announcement, the revised versions of the Payment Service Act (PSA) and Financial Instruments and Exchange Act (FIEA) would be enforced in Japan starting next month. Japanese regulators made changes to existing laws to regulate cryptocurrencies. Crypto exchanges operating in the country from May 1 will have to manage users’ money separately from their own cash flows, according to the revised regulations. There has also been a change in the basic terminology; “virtual currency,” is now referred to as “crypto asset.”
According to the new regulations, if users of a crypto exchange keep crypto assets in the hot wallet, the exchange would have to keep the same amount of crypto assets in reverse so the exchange can fully reimburse in case of a hack.
How would new regulations affect the crypto industry?
The new crypto regulations in Japan can help the crypto industry grow in the Asian country. Regulatory measures like the FIEA and PSA may help Japan stand out as a safe haven for crypto. In order to tackle initial coin offerings (ICOs) and security token offerings (STOs), regulators included the concept of electronically recorded transferable rights (ERTRs) under the FIEA. Starting May 1, crypto asset derivatives transactions will be regulated under the FIEA.
Several other countries are also working on enforcing the Financial Action Task Force (FATF) guidelines to regulate cryptocurrencies.