04 Jun 2019 #Bitcoin
Japanese crypto market has entered a new spiral of development following the amendments to the cryptocurrency regulations which had been subject to prolonged debates in the country’s financial and political circles. These discussions have found expression in a new bill that puts all crypto-related activities in tighter framework, justified by the strive of the officials to safeguard the end-user and mitigate the possibility of using digital currencies as a mean for money laundering and other illicit financial operations.
The bill, which makes provision for the amendments to the preexisting legislation, was passed at the tail end of May by the vast majority of votes in the House of Representatives, which constitute the lower house of the National Diet of Japan, during the regular plenary session. The updated legislation is due to come into force in April of the next year.
The legal initiative was elaborated and drafted by the officials at the Financial Services Agency (FSA), the country’s chief financial regulator. The bill directly affects two legislative acts that regulate the circulation of cryptocurrencies in Japan and the activities of the corresponding platforms, namely the Financial Services and Exchange Act and the Payment Services Act.
The changes will touch upon the terminology: the current definition of cryptocurrencies as ‘virtual currencies’ is to be abolished and substituted with the ‘cryptographic assets’, which has much broader interpretation.
The document stipulates that any legal entity that has cryptocurrencies on its account, even for the purposes of storage, would be legally regarded as the digital asset exchange, thus fall under the obligation to register as such with the authorities and acquire a pertinent license.
Many digital entrepreneurs have already expressed their concern about the price of such a license since it is rumored to be exorbitant for the companies that operate on stringent budgets. Moreover, all companies will be obliged to store crypto assets in cold wallets, which is a justifiable measure given the number of exchange hacks and other forms of cyber attacks that occurred over the course of the past several years in Japan alone.
The bill also addresses the issue of aggressive marketing by establishing limitations on the intensity of advertising campaigns, and even going as far as restricting the promotion and solicitation of risky cryptocurrency speculations.
Following another of FSA’s directives, each cryptocurrency exchange must submit the exhaustive list of crypto assets that are being traded on the platform and also duly notify the authorities of any further coin listings, so that the regulator could carry out a thorough background check of the respective crypto projects.
The amendments also provide for tighter regulations on derivatives trading, as well as margin trading, which accounts for a significant part of all cryptocurrency trades in Japan. As per this new regulation, the leverage for this type of trading will be restricted to 25-50% of the initial deposit.
The renewed crypto regulation policy will serve as the basis for the manual that Japan plans to present to the G20 members on the next Summit that will take place in Osaka this June.
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