Japan’s cabinet has approved a bill to amend the Payment Services Act promulgated in June last year, which was enacted to set the regulatory framework for stablecoins, cryptocurrency brokers, and cross-border money transfers.
The reforms, suggested by Japan’s Financial Services Agency (FSA), aim to create a more accessible trading environment for businesses while minimizing financial crime and guarding against risk to investors.
One of the bill’s major provisions is establishing a new category of companies that will serve as middlemen in cryptocurrency transactions.
Until now, any business intending to allow people to buy and sell digital currency had to become a fully licensed crypto exchange, subjecting it to harsh financial guidelines. The new rule allows non-custodian businesses that match buyer and seller instead of holding cash to register as crypto brokers, opening markets much more conveniently.
This move, effective immediately, is reported to bring additional competition and prompt more businesses to provide crypto services in Japan. Such intermediaries, nevertheless, will continue to be bound by strict advertising and disclosure regulations to facilitate user transparency.
Though they won’t have to maintain the same level of capital requirements as exchanges, they’ll still have to comply with anti-money laundering rules, once again showing Japan’s devotion to fighting financial fraud.
New rules grant stablecoins greater flexibility
One of the other major amendments included in the bill covers stablecoins — which gain their value from traditional assets such as the Japanese yen or the U.S. dollar. Japan has been one of the strictest regulators of stablecoin issuers, mandating that they keep 100% of reserves in bank accounts.
This is in line with the new FSA stablecoin issuer regime, which includes these securities. The rule establishes reserve assets are stable and safeguarded and enables the agency to intervene in the event of issuer non-compliance.
Regulators who have ruled out any risk to customers are behind this move. Japan is clearly a key player in the global stablecoin market now. It has completed rules for overseas payment channels that lack fund settlement functions and launched new protection measures for crypto trading platforms.
Previously, companies acting as payment gateways without processing funds operated under relatively lax regulations. The new law changes this, requiring them to comply with consumer protection and anti-money laundering laws.
Though they won’t have to maintain the same level of capital requirements as exchanges, they’ll still have to comply with anti-money laundering rules, once again showing Japan’s devotion to fighting financial fraud.
New rule strengthens Japan’s position as a crypto hub focused on investor protection
The new rule strengthens Japan’s position as a crypto hub focused on investor protection. Japan already has some of the most stringent cryptocurrency regulations in the world, measures that followed Mt. Gox’s disastrous failure in 2014.
These new regulations add additional weight to the framework, bolstering Japan’s position as a crypto hub once again with a focus on investor protection. Though the country has frequently derided the borderless nature of crypto, its regulatory framework remains one of the most stringent in the world.
That has ensured investor safety, but critics say it has rendered Japan’s cryptocurrency market no more competitive than its offshore rivals.
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