Japan Tightens Rules for Cryptocurrency Storage and Trading

In Japan, cryptocurrencies are treated as property legally and cryptocurrency exchanges are also legal and they must register with the Financial Services Agency to back that up.

Notable is that Japan had the world’s most progressive regulatory climate for cryptocurrencies; it recognized Bitcoin and other digital currencies from early in 2017, as legal property under the Payment Services Act. The country has the world’s biggest Bitcoin market and, in December 2017, the National Tax Agency ruled that gains on cryptocurrencies should be categorized as ‘miscellaneous income’ and investors taxed at rates of 15%-55%.

In recent news, Japan has officially made revisions on its laws to provide to make them clearer and put more grip on the handle controlling cryptocurrencies. They have an amendment of the act includes the change of now defining “virtual currency” with the broader term “cryptographic assets.” In addition to that the amended act reveals, any company even storing cryptocurrency will be considered a “cryptographic asset exchange” and thus required to register and maintain what experts believe will be an expensive license.

The regulations for cryptocurrency exchanges in Japan have been similarly progressive. Even after legalising them, a series of high profile hacks made crypto regulations a sort of urgent national concern. One incident was the notorious Coincheck heist of $530 million in digital currency. This alone was enough to get regulators on their feet again to amend ‘something’. In time past Japan’s Financial Services Agency (FSA) had stepped up efforts to regulate trading and exchanges: amendments to the Payment Services Act now require cryptocurrency exchanges to be registered with the FSA in order to operate – a process which can take up to six months, and which imposes stricter requirements around both cybersecurity and AML/CFT. Growing AML concerns have drawn the FSA’s attention to further regulatory steps.

Masahiro Yasu, CEO of a token-based social media system spoken on the change having effects on his company ALIS. In his words: “Smaller companies will need abundant funds if more stringent management systems are required. It may be impossible to maintain existing business unless it changes,”

The legislation amending the Payment Services Act and Financial Instruments and Exchange Act was formally enacted on May 31 and will take effect in April of next year. The new law had been in the works for months, it will also limit margin trading in cryptocurrency.

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Credits – John Biggs

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