Japan – FinTech and Blockchain Law Watch

Japan’s New Crypto Regulation – 2019 Amendments to Payment Services Act and Financial Instruments and Exchange Act of Japan

Dec 02 2019

Japan will fundamentally change its crypto asset regulations effective in spring of 2020.

In May, 2019, the National Diet, the Japanese national legislature, passed an amendment bill to the Payment Services Act (the “PSA”) and the Financial Instruments and Exchange Act (the “FIEA”), which was promulgated on June 7, 2019 (the “2019 Amendment”). The 2019 Amendment will become effective within one year from promulgation, following further rulemaking by the Japan Financial Services Agency (the “JFSA”) to implement the 2019 Amendment, which is anticipated sometime soon and includes public comment process.

International Cryptocurrency Regulation Top of the Agenda for the Japan G20 Summit

Apr 26 2019

By Jim Bulling, Felix Charlesworth and Andrew Fay

In the lead up to the annual G20 Summit, to be hosted by Japan, Prime Minister Shinzō Abe has commissioned the creation of a cryptocurrency governance manual. The manual, which will be distributed at the G20 Summit, supports a uniform approach to regulating cryptocurrencies and contains regulatory proposals and justifications relating to the following issues:

protecting customer assets;
international security protocols; and
providing customers with information (particularly in the event of a hack).

Hacking of digital currency exchange leaves Japanese company footing the bill

Jan 31 2018

By Cameron Abbott and Allison Wallace

Coincheck – one of Japan’s largest digital currency exchanges – says it will repay hundreds of millions of dollars’ worth of virtual money, after hackers broke into its network, stealing a reporting 58 billion yen (AUD660 million) worth of NEM (a cryptocurrency like Bitcoin).

Hackers broke into the Coincheck network early Friday morning, but it wasn’t discovered until nearly eight and a half hours later. Read More

ASIC extends FinTech cooperation to Asian counterparts

Jun 30 2017

By Jim Bulling and Michelle Chasser

On 13 June 2017, the Australian Securities and Investments Commission (ASIC) entered into a FinTech co-operation agreement with the Hong Kong Securities and Futures Commission (SFC). Soon after, on 23 and 27 June 2017, ASIC also entered into similar arrangements with the Japan Financial Services Agency (JFSA) and the Malaysia Securities Commission (MSC). These arrangements provides a framework for ASIC to work more closely with these regulators.

As a result of these agreements, ASIC, SFC, JFSA and MSC can refer FinTech businesses to each other for advice and support via ASIC’s Innovation Hub, SFC’s FinTech Contact Point, JFSA’s FinTech Support Desk and MSC’s alliance of FINtech community (aFINity). This means Australian FinTech businesses wishing to operate in Hong Kong, Japan or Malaysia will now have a simple pathway for engaging with those countries’ regulators, and vice versa. This can provide valuable assistance for FinTech businesses operating in one jurisdiction which want to better understand the rules in the other.

Cryptocurrencies becoming more mainstream?

Jun 19 2017

By Jim Bulling and Michelle Chasser

Steps have been taken this year in Japan and Norway towards the integration of digital currencies such as Bitcoin into the mainstream financial sector. Japan has amended financial laws to include coverage of digital currencies as a type of ‘prepaid payment instrument’, and an online bank in Norway has announced plans to offer clients the ability to link their bank accounts with cryptocurrency accounts.

Regulators in the UK and Japan enter into Co-operation Framework

Mar 20 2017

By Jonathan Lawrence

The Financial Services Agency of Japan (JFSA) and the UK’s Financial Conduct Authority (FCA) have entered into a Co-operation Framework to support innovative FinTech companies in their respective markets. For the full text of the agreement by way of an exchange of letters, see Letter from the JFSA to the FCA and Letter from the FCA to the JFSA.

This Co-operation Framework will provide a regulatory referral system for innovative financial businesses that have been offered support by the JFSA or the FCA through their respective FinTech innovation functions, or would qualify for such support (an Innovator Business). The FCA launched Project Innovate in October 2014 which is led by the FCA’s Innovation Hub. The JFSA established its FinTech Support Desk in December 2015 as a one-stop contact point for FinTech businesses.

Asia Region Funds Passport memorandum signed

May 02 2016

By Jim Bulling and Michelle Chasser

After 6 years of international negotiation, Australia has signed the Asia Region Funds Passport’s Memorandum of Cooperation with Japan, South Korea and New Zealand. Other countries which have been involved in the negotiations but are yet to sign include Singapore, Thailand and the Philippines.

The Passport facilitates the cross border offering of eligible collective investment schemes in participating countries. Australian Minister for Small Business and Assistant Treasurer, Kelly O’Dwyer, said “The Passport will create a single market for managed funds encompassing economies across the region”.

FinTech businesses which utilise managed funds, such as marketplace lenders and some robo-advisers, and are regulated in a participating country may be able to use the Passport to offer managed funds in other participating countries without needing to go through local licensing and registration processes.

The Memorandum of Cooperation comes into effect on 30 June 2016 and can be found here.

Japan Aims to Facilitate Banking Institutions to Invest in Bank-Related FinTech Companies

Apr 21 2016

By Yuki Sako

On March 4, 2016, the Cabinet of Japan approved and submitted to the Diet an amendment bill to the Banking Act of Japan that would enable banks and bank holding companies to acquire more than the permitted holding of nonbank interests (5% (banks) or 15% (bank holding companies)) of certain nonbank companies whose businesses involve innovative technologies that can be applied in banking business. Under the amendment bill, banking institutions are, with approval of the Financial Services of Agency of Japan (FSA), permitted to acquire and hold a controlling interest in various FinTech companies that would provide innovative technologies to advance banks’ operations or benefit bank customers. When proposing the amendment bill, the FSA explained that the amendment bill aims to facilitate banking institutions to invest in bank-related innovative technologies, IT technologies in particular.

The amendment bill is expected to pass the Diet during the current Diet session and to come into force within 1 year after the promulgation.

Text of the amendment bill can be found here (only in Japanese).

Japan Introduces Regulation on Bitcoin Exchanges

Mar 22 2016

By Ayuko Nemoto and Yuki Sako

To date, virtual currencies and related service providers remain unregulated in Japan. However, on March 4, 2016, the Cabinet of Japan approved an amendment bill to the Payment Services Act of Japan and submitted it to the Diet (“Amendment Bill”).

Most importantly, the Amendment Bill aims to bring the industry under the supervision of the Financial Services Agency of Japan (“FSA”) and introduce new registration requirements for virtual currencies exchanges, including those based outside of Japan that provide services to customers in Japan. Exchanges based outside of Japan may be registered as a “Foreign Exchange” if they are registered or licensed in their home jurisdiction; however, they must have an office in Japan and designate a “representative of Japan,” the failure of which would result in disqualification.

Tag:Japan