The cryptocurrency ecosystem in Japan will have new rules to adapt to after the country’s House of Representatives voted in favor of a bill that officially allows changes to be made to existing regulation for financial service companies.
The newly introduced rules were prepared by the Japan Financial Services Agency (FSA) and will now form a section of the country’s amended Payment Services Act and Financial Instruments and Exchange Act.
Following the approval today, a notice on the FSA’s website revealed that the rules would go into force in April 2020.
An Overview of Japan’s New Rules
Among other changes that the newly introduced changes would bring, the following stand out:
Japan has replaced the term “virtual currency,” which often appeared in existing regulations to “cryptographic assets.” In line with our December report about this amendment, the FSA believed that the new term is broader and removes the possibility of citizens assuming that cryptocurrencies are legal tenders.
Any firm that holds the client’s crypto assets in the form exchange or wallet will have to acquire a license from the FSA or risk facing regulatory actions.
Exchanges offering margin trading to users will have to limit leverage to two to four times the initial deposit.
Cryptocurrency exchanges would also have to introduce advanced safety measures for its cold wallets which be stolen by personnel or external hacker.
Japan, which we reported is likely to share its crypto regulatory insights with G20 member nations, has continued to lead the race when it comes to significant countries that are bringing the crypto space under regulatory purview.
In earlier reports, we revealed that the country’s national tax agency is also looking to strengthen regulations around the payment of crypto taxes.