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Shocking Changes in Japan’s Crypto Regulations: 5 Key Facts You Must Know
Understanding the New Intermediary Law and Its Impact on Crypto Businesses
On Friday, Japan’s National Diet passed a groundbreaking law on revised payment services (PSA), significantly altering the landscape for cryptocurrency enterprises. This new legislation introduces a category of “intermediary business,” allowing companies to connect users with exchanges without the need for full registration as exchanges with the Financial Services Agency (FSA). While this may seem beneficial, the law also imposes stricter regulations and increased centralization.
Initially proposed in March, the amendments have been hailed as a major step forward. The most notable change is the establishment of “intermediaries,” which will now have a separate, more lenient registration process. This shift aims to streamline operations for businesses involved in cryptocurrency and digital assets.
“The new law is expected to eliminate barriers for gaming companies and others looking to engage in the crypto space.”
Companies like Mercari, SBI Securities, and Monex Securities have already registered as intermediaries, signaling a shift in the market dynamics.
- Creation of “intermediaries” with relaxed registration rules.
- Establishment of a separate registration system for exchanges.
- New legal authority for the FSA to require foreign crypto firms to withhold assets in Japan to prevent outflows during bankruptcies.
- Trust-type assets can now be partially invested (up to 50%) in low-risk options like government bonds.
- Stricter regulations for foreign “collection agencies” providing e-commerce services.
The revised law, set to take effect within a year, imposes stringent requirements for anti-money laundering (AML) and counter-financing of terrorism (CFT) measures. It facilitates entry into the regulated crypto ecosystem for communication businesses, while also preventing foreign exchanges from engaging with Japanese users.
Centralization and Stricter Rules: A Departure from Satoshi’s Vision
While many in the gaming and crypto sectors welcome these amendments, traditionalists who adhere to Satoshi Nakamoto’s vision of decentralized finance view the law as a significant setback. The new regulations may enable banks to produce stablecoins more easily, potentially stifling competition from foreign markets.
According to a 2022 report by the Mitsubishi UFJ working group, the aim is to curb the dominance of foreign stablecoins and decentralized applications, which have been gaining traction in Japan.
“The goal is to end the current situation where funds are primarily held in foreign stablecoins.”
However, the regulation of foreign payment agents, now classified as cross-border “collection agencies,” raises concerns. The FSA has indicated that it will not pursue low-risk activities aggressively, but the potential for arbitrary enforcement remains a risk. This could lead to increased scrutiny of online casinos and investment schemes, which may be classified as non-compliant enterprises under the new amendments.
As Japan navigates these changes, the balance between regulation and innovation will be crucial. The introduction of these laws could either pave the way for a more robust crypto market or stifle the very innovation that Japan seeks to promote.
What are your thoughts on these new regulations? Will they help or hinder the growth of the crypto industry in Japan? Join the conversation!
Frequently Asked Questions
- What is the new intermediary law in Japan? The law allows businesses to operate as intermediaries without full registration as exchanges, streamlining the process for crypto companies.
- How does this law affect foreign crypto firms? It gives the FSA the authority to require foreign firms to withhold assets in Japan to prevent outflows during bankruptcies.
- What are the relaxed registration rules for intermediaries? Intermediaries will have a separate registration process with less stringent requirements compared to traditional exchanges.
- What are the implications for e-commerce services? Stricter regulations will apply to foreign collection agencies providing e-commerce services, potentially increasing compliance costs.
- How will this law impact the crypto market in Japan? It could either facilitate growth by reducing barriers or hinder innovation through increased centralization.
- What is the timeline for these changes? The revised law is expected to take effect within a year.
- Are there any risks associated with the new regulations? Yes, the potential for arbitrary enforcement could lead to increased scrutiny of certain businesses.
- What is the FSA’s role in this new framework? The FSA will oversee the registration and compliance of intermediaries and exchanges under the new law.
- How can businesses prepare for these changes? Companies should review their compliance strategies and consider registering as intermediaries if applicable.
- Where can I find more information on crypto investing? Join our Telegram channel for the latest news and discussions: Investing Guru and participate in our chat: Investing Guru Chat.
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