Japan Approves Bill To Impose Stricter Crypto Regulation

News, Regulation | June 4, 2019 By:

The House of Representatives of Japan has approved a new bill to amend two laws related to cryptocurrencies in the country.

The bill was prepared by Japan’s Financial Services Agency (FSA) and was introduced in parliament in mid-March of this year. The House of Representatives, the lower house of the National Diet of Japan, and the House of Councillors, the Diet’s upper house, approved the bill, allowing authorities to amend two existing financial laws – the Funds Settlement Act and the Financial Instruments and Exchange Act – both of which apply to crypto assets. The new law will come into effect in April 2020.

The amendments will reportedly tighten crypto regulation in a bid to promote user protection, more robustly regulate crypto derivatives trading, mitigate industry risks such as exchange hacks, and broadly establish a more transparent regulatory framework for cryptocurrencies. Under the new law, margin trading, which accounts for about 80% of domestic crypto trades in the country, will be regulated under the Financial Instruments and Exchange Act.

The bill also replaces the term “virtual currency” with a broader term “cryptographic assets.” Any company that stores cryptocurrencies will be considered a “cryptographic asset exchange” and will be required to register and maintain a license.

“Smaller companies will need abundant funds if more stringent management systems are required,” said Masahiro Yasu, CEO of token-based social media system ALIS. “It may be impossible to maintain existing business unless it changes.”