As the world continues to tackle the immediate threat of COVID-19 spread across the globe, recent reports suggested that the Japanese government was moving forward with their plans to instill new laws in the country in order to regulate cryptocurrencies.
According to an official government newsletter dated 3 April, it was reported that the revised reversion of PSA and FIEA will be administered in Japan from the beginning of next month, i.e. 1 May.
PSA or the Payment Services Act and the Financial Instruments and Exchange Act (FIEA) are two separate bills passed by the Japanese House of Representatives at the beginning of 2019 to regulate digital assets in Japan. The legislation was expected to come into effect by the beginning of April 2020, but with the current pandemic outbreak tightening up on various enforcement actions, the dates were postponed to May.
Japan has always been active in the digital asset ecosystem as the infamous Mt.Gox exchange operated from Shibuya, Tokyo, before meeting an uneventful end.
At the time of writing, the country had lacked official regulations to supervise crypto in Japan, hence the amendment of current regulations was identified as the best-case scenario to introduce a form of legal status to digital assets in the country.
With the PSA, basic terminology was also altered, as ‘crypto-assets’ rather than ‘virtual currency’ would be used to tighten restrictions on crypto custodians.
The legislation also emphasized that crypto exchanges in the country would now need to manage their user’s capital separately and not mix them up with their own cash flows, by using ‘reliable methods’ such as cold wallets.
However, in the event that any users insist on the use of hot wallets, it is mandatory for the platform to hold the same kind and amount of crypto assets in order to repay to its users in the event of a hack or theft.
Certains changes were also made to the FIEA, which included the idea of electronics recorded transferable rights (ERTRs), which will be used to categorize ICOs and STOs, and these will be regulated under the act. It was indicated that ERTRs would be referred to tokens that are expecting a certain amount of profitability, such as security tokens.
Japan’s push for CBDC on the horizon?
The country has been plotting its move in the crypto-space for a long period of time and earlier this year, A member of the ruling party in Japan, disclosed to Reuters that some of the country’s policymakers were contemplating on the issuance of a CBDC or Central Bank Digital Currency, which will be a joint initiative between the government and the private organizations.
Norihiro Nakayama, the parliamentary Vice-Minister for Foreign Affairs, believed that such a partnership would put Japan in line with the current changes taking place in the global financial ecosystem and the country will be more than inept to adopt technological changes.