Japanese Regulator Wants to Amend the Nation’s Crypto Law

Cryptocurrency Japan Payments Regulation

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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June 26, 2023 06:54 EDT

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A batch of new crypto regulations is incoming in Japan – where the nation’s top financial and crypto regulator has put forward legal amendments to payments-related legislation.

The proposals were made by the Financial Services Agency (FSA), which has proposed making alterations to two existing acts of law as part of a bid to “build a stable and efficient settlements system” for the era of digital finance.

CoinPost reported that the regulations make mention of stablecoin-related issues, as well as new protocols designed to “improve the effectiveness of [crypto] transaction monitoring at banks” and other financial institutions.

The FSA explained that certain stablecoins and stablecoin issuances lack adequate user protection, although comprehensive proposals for the regulation of these assets are likely to come at a later date.

It also proposed the creation of a “registration system” for brokers and intermediaries that provide buying, selling, and management services for crypto and other “electronic methods of payment.”

Like crypto exchanges, brokers will be obliged to submit regular reports to regulators. The latter will also have the power to issue document submission orders, conduct on-site inspections, issue business improvement orders, and even wind up businesses that fail to comply or meet standards.

However, the package of measures is not only compliance-based. The FSA spoke of fostering the national blockchain and crypto sector and will seek to add legally binding definitions of “cryptoassets” in the acts’ definitions of “electronic methods of payment.”

The measures also seek to bolster the effectiveness of transaction monitoring by establishing a platform for overseas-based crypto exchanges to collaborate with domestic trading platforms on anti-money laundering (AML) measures that involve in the banking industry.

The FSA wants to cultivate a network of exchange transaction analysts who jointly carry out the analysis of suspicious-looking transactions for both the forex and crypto markets.

Further measures were put forward to identify suspicious-looking prepay transactions – for account top-ups and gift card purchases that could present AML violation risks.

The government will need to sign off on the amendments, which will also need to be green-lighted in parliament. However, thus far all of the FSA’s previous legislation-related requests have been approved – and are likely to be bundled with other non-controversial legal amendments. As such, they will likely be enshrined into law in the coming weeks, and could promulgate later this year.
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