Now, coming to the view of legalization of cryptocurrency in Japan, the cryptocurrency in Japan is legal and it is considered as a property. When talking about the exchanges it is also legal and it must be registered with the Financial Service Agency. There is a legislation named Payment Services Act (PSA), under this regulatory act, the Bitcoin and other digital currencies are recognized as legal property in Japan. Since, the crypto exchanges have been considered as legal, the government imposing taxes under the categorization “Miscellaneous income” on the investors who gains income from the cryptocurrency, this ruled was imposed by the National Tax Agency in 2017. Later, in 2020 Amendment of PSA and Financial Instruments and Exchange Act (FIEA), they replaced the term “virtual currency” by introducing a new term “crypto asset”. It made the crypto derivatives trading ease and also imposed restrictions in use of virtual money by the investors. Just like the other countries, Japan also is in the progress status in bringing the cryptocurrency exchange regulations. Though the regulations are legal, since after the attack of Coincheck heist of $530 million in digital currency and other high-profile hacks they brought the cryptocurrency regulation as an immediate concern among the nation. Due to this national urgency, they started taking steps to regulate the trading and exchanges and the PSA requested the Crypto exchanges should be registered under the FSA to impose strict AML and CFT and cybersecurity requirements. The registration process took around six months and in mid-2019 amendment the registration time has been extended to include custodian services providers. Later, in 2020 two regulations were established by the Japan namely Japanese Virtual Currency Exchange Association (JVCEA) and the Japan STO Association. Hence, every exchanges are member of JVCEA and only five major Japanese Financial institutions were comprised under Japan STO Association and work together to advice to unlicensed exchanges and to encourage compliance.
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B.A., B.L., (Hons) IPDP., (London)
Pgd IPR., Pgd Cyber Law., Msc., (IT)
CCI., CFA., IPCL.,
Advocate, Madras High Court
Karthikeyan, is a renowned cyber law expert, who is also the Managing Partner of Law Office of Karthikeyan, a reputed law firm based in Chennai.More About Us