- A bill seeking to tighten crypto regulations in Japan has passed with broad political support
- The bill focuses on end user protection in various forms
- Japan will set a global benchmark in crypto regulation
The House of Representatives in Japan has approved a new bill that will amend laws governing cryptocurrency regulation. The bill seeks to bring amendments to two national laws that apply to crypto assets.
Broad political support
According to a report on Cointelegraph Japan on May 31, the bill that has been passed revises the Act on Fund Settlement and the Financial Instruments and Exchange Act and is expected to become law come April 2020. The bill was prepared by the country’s financial regulator, the Financial Services Authority (FSA) and was accepted by the house in mid-March. The bill, according to an update on FSA’s website was approved by a majority in the House of Councilors’ plenary session. Reacting to the development, Bitpoint Japan:
“We have received a very positive response to this revision of the law. This time there are additional matters for virtual currency exchange companies to deal with client-owned assets; […] there will be regulatory agreements in each country by the G20 and the fall FATF, etc. From this, a healthy market of virtual currency will be finally developed on the basis of these.”
User protection in focus
It is expected that the proposed amendments to Japan’s financial instruments and payment service laws will enable the tightening of cryptocurrency regulation as a way is promoting user protection. The new laws will also more strictly regulate crypto derivatives trading and mitigate industry risks like cryptocurrency exchange hacks besides creating a more transparent regulatory framework for digital currencies.
The bill also seeks to introduce a legal name change for cryptocurrencies to “crypto assets,” which were formerly designated as virtual currencies in the country. The new laws will also provide for more robust legislation for crypto margin trading, limiting leverage to two to four times the initial deposit.
Japan leading the pack
The bill incorporates several suggestions from study group meetings conducted by FSA. The study group suggested that “In addition to changing the name virtual currency to ‘crypto assets,’ the amendments would also require that crypto assets be managed using a cold wallet, etc.” Seeing there have been several cases in Japan where hot wallets have been hacked and coins stolen, the bill also requires that customers store their crypto assets in cold wallets.
While there may be a general view within the crypto industry that regulations need to be tightened, there is a general feeling that Japan’s virtual currency regulation will set a global benchmark for regulating the sector. The bill was taken to the House of Representatives under the title:
“The draft bill to revise a part of the Act on Fund Settlement to cope with the diversification of financial transactions accompanying the progress of information and communication technology.”
