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During the early years of bitcoin, when crypto regulation around the asset class was lax, Japan was among the countries that traded and managed it. Mt. Gox, which was once known as the largest crypto exchange, was the birthplace of the first Bitcoin in the Land of the Rising Sun.

But after the $500 million crypto hack in 2018 on their local crypto exchange Coincheck, the Japanese government is now urging other countries to apply the same type of crypto surveillance to banks.

Japan wants to tighten crypto regulations

In an interview with Japan timeMamoru Yanase said the following:

“Crypto has become important […] IImplementing effective regulation can be done the same way you regulate and supervise traditional institutions.

Mamoru Yanase, deputy director general of the Finance Services Agency’s Strategy Development and Management Bureau. Source: Japan Times

One of the triggers for tighter crypto regulations in Japan was the infamous collapse of FTX and the fraud accusations against Sam Bankman-Fried, its founder and former CEO.

Yanase also highlighted the differences in global regulation of digital assets.

Thanks to Japan’s push for crypto regulation and the existing rules that provided them with some sort of protection against the FTX crisis, investors on the exchange will be able to withdraw their funds with a local subsidiary of the company from February, according to Reuters.

Yanase, who has a background in financial regulation, said crypto technology itself is not to blame for the most recent disaster.

“The recent cryptocurrency scandal showed otherwise. The problem of loose governance, absences of both regulation and supervision, and loose internal controls. »

Japan, a crypto-friendly nation

Before the local crypto hack 2018Japan already recognizes BTC and other similar cryptocurrencies and virtual assets as legitimate properties, according to Penalty Analyzer.

Recognition is done in accordance with the Payment Services Act (PSA), which is part of the government’s advanced regulatory infrastructure for cryptocurrencies. Crypto exchanges must be registered and comply with Anti-Money Laundering and Anti-Terrorist Financing (AML/CFT) policies.

The country’s National Tax Agency determined that cryptocurrency income is classified as “miscellaneous income” in 2017.

Image: Coinpedia

Japan is considered relatively crypto-friendly despite calls for tighter crypto regulation. Businesses that want to engage with cryptocurrencies are allowed to register as cryptocurrency exchanges, and the industry is largely limitless.

PSA transformation

In the meantime, changes have been made to the PSA since the 2018 breach, as well as to the Financial Instruments and Exchanges Act (FIEA).

In May 2020, the rules and regulations surrounding crypto regulation were updated as follows:

  • Change of term from “virtual currency” to “crypto-assets”
  • Increased limits on how crypto users manage their virtual money
  • Stricter Regulations Implemented for Trading Crypto Derivatives
  • Cryptocurrency Custody Providers Are Protected by New PSA 2020 Laws and Regulations
  • Companies with cryptocurrency derivatives are protected by the new FIEA

Featured Image by Watcher Guru

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