Cryptoasset Regulatory Framework in Japan

Abstract

Japan was the first country to regulate cryptoassets. After the Mt. Gox debacle, Japan issued its regulations governing cryptoassets. Then again in 2018, other cyberattacks misappropriated funds amounting to $580 million, which led to the establishment of Japan Virtual Currency Exchange Association, a self-regulatory body, and further stricter regulations governing cryptoasset exchange providers by revising Payment Services Act, 2009 and the Financial Instruments and Exchange Act, 1948. Although, the new revised regulations have put an extra burden on the exchange service providers, they are estimated to enhance user protection. This article deals with the regulatory environment surrounding cryptoassets in Japan and further explains the new revisions that have been incorporated in the Payment Services Act, 2009 and the Financial Instruments and Exchange Act, 1948.

Keywords: cryptoassets, virtual currencies, cryptocurrencies, regulations, cryptocurrency regulations, Payment Services Act, Financial Instruments and Exchange Act

JEL Classification: K49, K00, K19