Why Does A New Japanese Rule Make Altcoin Investing Simpler?
There might be over 18,000 different Cryptocurrencies now active, with dozens listed on the globe’s largest platforms. However, in Japan, trading companies must undergo a laborious listing procedure once they can make tiny Cryptocurrencies accessible to customers, making accessibility to them particularly difficult. If reports from Nikkei Asia are to be believed, a consortium of Japanese Crypto exchanges is set to make significant modifications to the selection procedure. A “green list” of 18 currencies that regional exchanges may provide without finishing a time-consuming application that can take more than six months is being released by the Japan Virtual and Crypto Assets Exchange Association, or JVCEA for short. As a result, the JVCEA, which now comprises thirty one digital assets firms, will be free to concentrate on sanctioning fresh Cryptos rather than ICOs and IPOs. According to the reports, Cryptocurrencies might enter this green listing if they’ve been around for at least six months and are listed on for a minimum of three regional trading exchanges.
The Financial Instruments and Exchange Act (FIEA)
The Financial Instruments and Exchange Act (FIEA) was enacted in 1948 and serves as the primary piece of Japanese law governing the sale and trading of securities inside the country. Financial institutions, such as banks, which enable the trading of securities are subject to the law. Because they are not legally “securities,” most Crypto-assets really aren’t governed by the FIEA. Since virtual currencies like Bitcoin are outside of the purview of the Financial Industry Regulatory Authority (FIEA), the Payments Services Act is likely to be the law that applies to them. In particular, securities-like Cryptos are subject to the oversight of the FIEA. Whatever the case may be, Cryptocurrencies in Japan are mostly controlled due to their likely inclusion under the PSA or the FIEA. As a result of the recent revisions to the FIEA, ICO tokens are now legally defined as type 2 securities, making them subject to the FIEA even though the vast majority of Cryptos really aren’t investment vehicles.
There’s many concerns that Japan may lag below other countries in the digital assets field because of the bureaucratic hurdles that must be cleared by exchanges wishing to list Bitcoin and Ether. According to data from Nikkei Asia, only around 40 different Cryptos are traded on Japanese markets. By comparison, by the end of 2021, 139 unique currencies were available for trading on a single American marketplace, Coinbase. Coinbase oversees $278 billion in client assets, while Japanese investors had $9.8 billion in Cryptocurrency on local exchanges as of the end of January. Overzealous regulation has the potential to hinder innovation in Japan’s Cryptocurrency business and hurt regular individuals, who might be forced to seek other trading systems outside of Japan, where they may be less well protected.
The Payment Services Act (PSA)
In 2012, Japan introduced the Payment Services Act (PSA) aimed to make Japan’s monetary industry more secure and also effective for participants. The purpose of the PSA is to safeguard investors by mandating registration with the relevant Japanese authorities for businesses that provide financial payment services. In 2020, the Japanese House of Representatives revised the PSA to oversee Crypto exchanges as well as regular economic markets to encompass the regulation of “virtual currency.” Japan has included Bitcoin under its larger monetary systems legislation by regulating Cryptocurrencies as virtual currency.
Information To Be Licensed in Japan
In order to get a license in Japan, Cryptocurrency exchanges are required under the PSA amendments to provide the following data:
- The Official Name Of The Firm And Its Main Office Location.
- The Location And Contact Information For The Primary Office Handling Bitcoin Transactions.
- The Members Of The Company’s Board Of Directors’ Names.
- Adviser In Charge Of Accounting For The Firm’s Name.
- A List Of Every Single Digital Currency That May Be Traded On The Platform.
- Financial Resources Available To The Business.
- The Inner Workings Of The Company’s Approach For Doing Business And The Full Scope Of Its Bitcoin Dealings.
By the terms of the PSA, “any property value that is recorded on an electronic device or any other object by electronic means, that can be transferred through an electronic data processing system, that is not the Japanese currency, a foreign currency, or a currency-denominated asset, that can be used by any person for the purchase or lease of products and service providers, as well as it could indeed be bought from or even sold to such individuals are all considered virtual currency.
In its role as Japan’s major financial watchdog, the JFSA is responsible for ensuring the continued health of the country’s financial markets. The SEC as well as the PCAOB both report to the JFSA for oversight. The JFSA works with the Japanese authorities to develop modern funding laws as well as monitors Japanese banks to make sure they follow the rules. The JFSA has the power to restrict a financial institution’s activities as well as bring criminal charges against individuals who violate Japanese law. The JFSA also works to prevent terrorist financing and money laundering, which is vital to the safety of Japan’s financial sector and its investors. The JFSA’s role is similar in that it promotes Japan’s economic development for the long-term benefit of the country. The JFSA has jurisdiction over Cryptocurrencies since they might be used to launder money or sponsor terrorism.
Disclaimer: The author’s thoughts and comments are solely for educational reasons and informative purposes only. They do not represent financial, investment, or other advice.