Japan's amended Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA) took effect on May 1, 2020, introducing significant changes to the regulatory framework for cryptocurrency operators. These updates aim to enhance investor protection and clarify compliance requirements for crypto businesses.
Key Changes Under the Amended Laws
1. Expanded Regulatory Scope
- Crypto Custody Services: Providers managing third-party crypto assets now require PSA registration.
- Derivatives Trading: Crypto-related derivatives fall under FIEA oversight, mandating stricter licensing.
2. New Operational Requirements
Client Asset Segregation:
- Cash must be held in trust accounts.
- Crypto assets must be stored offline (cold wallets) unless exceptions apply (≤5% of holdings).
- Audits: Annual audits by certified accountants are mandatory.
- Risk Disclosures: Ads must clarify crypto risks and avoid promoting speculative trading.
3. Prohibited Practices
- Market manipulation, misleading ads, or undisclosed conflicts of interest are banned.
Compliance Impact on Businesses
- Exchanges: Must adjust terms to exclude Japanese users if unlicensed (e.g., BitMEX's 2020 exit).
- Self-Regulatory Bodies: JVCEA and Japan STO Association collaborate with the FSA to enforce standards.
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FAQs
Q: Do stablecoins qualify as crypto assets under PSA?
A: The FSA hasn’t issued definitive guidance yet.
Q: Are crypto investment funds affected?
A: Fund managers handling crypto trades may need PSA registration.
Q: What happens to non-compliant platforms?
A: They risk license revocation or operational bans.
Sources: FSA Announcements, JVCEA Guidelines.