Japan is now one of the most progressive nations, which opens up a positive climate for cryptocurrencies. Japan had recognized Bitcoin and the other leading cryptos as legal property holdings under PSA (Payment Services Act). Based on these regulations, Japan’s crypto exchanges need to be registered with the AML/CFT obligations and comply with its rules. As we all know, Japan is one of the biggest global markets of Bitcoin now. Back in 2017, the National Tax Agency of Japan ruled that the gains over cryptocurrency need not be categorized as any miscellaneous income, and the investors will be taxed accordingly.
The recent regulations related to Japan’s cryptocurrency market include the PSA amendments and the Financial Instruments and Exchange Act (FIEA) regulations. This came into effect from Many 2020. カヴァン・チョクシ points out thatall these amendments have projected a term as “crypto-asset” instead of its normal usage as virtual currency. This places bigger restrictions on managing the users’ virtual money and stricter crypto derivatives trading regulations. Abiding by these rules, the crypto customer service providers in Japan fall under the broader scope of PSA, while the derivatives businesses come under FIEA.
The cryptocurrency exchange-related regulations in Japan are also progressive. Complying with PSA, now only the businesses having a competent local Financial Bureau can only operate as cryptocurrency exchanges. It is also to be noted that foreign crypto exchanges are also allowed to register in Japan, whereas they can enjoy the equivalent registration standards as in their hosting country.
So, cryptocurrency exchanges are legal in Japan and apropos to several hacks, including the Coincheck heist of about $530 million. The crypto regulations had become a major concern of the government, which acted accordingly to bring in stringent measures. Japan’s Financial Services Agency (FSA) further regulated the exchange and trading of cryptocurrencies in Japan, and amendments to PSA regulations required the cryptocurrency exchanges to register with FSA for operating in Japan.
Future of Japan’s cryptocurrency regulations
We can understand that Japan is an environment for cryptocurrencies from the above. However, concerns related to crypto also make it a challenge for the authorities, and FSA is focusing on bringing in further regulatory measures to take control. Following many talks between the FSA and crypto exchanges, there had been an agreement brought up in the form of self-regulatory bodies as:
- Japanese Virtual Currency Exchange Association or JVCEA, and
- Japan STO Association
With these introduced in 2020 April, Japan became the first country to take such a self-regulatory step. All the Japanese cryptocurrency exchanges are now members of the JVCEA, while five major financial institutions in Japan collaborated with it to establish a broader association named Japan STO Association. The JVCEA and STO Association aim to provide consulting to the unlicensed exchanges to ensure regulatory compliance. With constant and unrelenting efforts to regulate cryptocurrencies, all in a positive direction,
カヴァン・チョクシ conclude thatthe future of cryptocurrencies in Japan is bright without a doubt.