In Japan, new laws regulating cryptocurrencies-the payment services Act (PSA) and the financial instruments and exchanges Act (FIEA) – will come into force on may 1 this year.
The laws were passed by the Japanese Parliament last year, and were supposed to come into force on April 1. However, due to unplanned delays, the implementation of the new regulation was delayed until may 1.
Since there are no official laws regulating cryptocurrencies in Japan, amending existing acts is the only way for digital assets to have any legal status in the country. Therefore, quite a lot of amendments were made to the PSA, including changes in the basic terminology and stricter rules for cryptocurrency custodial services.
In addition, cryptocurrency exchanges operating in Japan will have to separate user funds and their own funds. In other words, they will need to find a third-party company responsible for storing user funds using “reliable methods” like cold wallets.
If customers insist on using hot wallets, the exchange must store the appropriate amount of funds in order to compensate users for their losses in case of hacking.
Changes to the FIEA introduce the concept of transfer of rights to tokens in order to regulate initial token offerings (ICOS) and sales of token shares (STOs). Fiea will also cover trading in cryptocurrency derivatives, which is the most popular type of trading in Japan.
Recall that in March, the Japanese financial services Agency (FSA) announced the launch of the Blockchain Governance Initiative Network (BGIN), which will promote the “sustainable development of the blockchain industry”.