Legislative development on crypto-assets in Japan: Revisions to the payment services act, etc.

Abstract

Japanese law began to regulate transactions on virtual currencies when revisions to the Payment Services Act and revisions to the Act on Prevention of Transfer of Criminal Proceeds were put into effect in April 2017. However, considering the recent hacking incidents and social problems on crypto-assets, the Financial Services Agency in Japan established the ‘Research Group on Virtual Currency Exchange Business, etc.’ in March 2018. Then, legislative efforts mainly based on the report by the Research Group resulted in the revisions of the Payment Services Act, etc. On March 15, 2019, the ‘Bill to Revise the Payment Services Act, etc. in Response to Diversification of Financial Transactions Associated with the Development of Information Communication Technology’ was approved at a Cabinet meeting. On the same day, the bill was submitted to the Diet by the Financial Services Agency. Through the proceedings of the Diet, the Act to Revise the Payment Services Act, etc. was enacted on May 31, 2019, and promulgated on June 7, 2019. By this legislation, which will enter into force soon in 2020, revisions to the Payment Services Act, revisions to the Financial Instruments and Exchange Act, and revisions to the Act on Sales, etc. of Financial Instruments are made in efforts to develop regulation for crypto-asset transactions.