Akasaka International Law, Patent & Accounting Office.

Introduction to Virtual Currency Law Development in Japan

Jan 20, 2017

Introduction to Virtual Currency Law Development in Japan

In April 2016, Diet (national legislature of Japan) approved a Bill to amend the Payment Services Act to regulate Virtual Currency. The FSA is currently seeking public comments regarding the amendments until January 27, 2017 with plans to enforce the changes around April 2017.

With the growing acceptance of Virtual Currency internationally, the amendments seek to add Virtual Currency as a new payment method in Japan.

Some of the main focuses of the amendment are as follow:

To define what Virtual Currency is;

To regulate the exchange of Virtual Currency by implementing registration and management standards;

To prevent money laundry or similar criminal activities in the form of Virtual Currency;

To provide best practice guidelines regarding security and compliance.

Under the amendments, Virtual Currency exchanges will need to registered and foreign organizations that target the Japanese market will be required to obtain license to operate.

For those that would like to know more about the background to the reform, issues and general direction of future developments in more detail we recommend the following report from the Financial System Council: http://www.fsa.go.jp/en/refer/councils/singie_kinyu/20160621-2/01.pdf

Bank of Tokyo-Mitsubishi UFJ Ltd. (a subsidiary of Mitsubishi UFJ Financial Group Inc.) already published news in 2016 that it plans to implement its new Virtual Currency system, “MUFG coins”, in the later months of 2017. While it is unclear how the Japanese community will embrace Virtual Currency, the law reforms and also this initiative by a major bank provide a momentum for the future development of Virtual Currency in Japan.   

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