The Japan Times is reporting that the Japanese legislature has adopted a Bill on the regulation of virtual, digital and crypto-currency exchanges.
The Bill, which is only available in Japanese at present, was approved by the House of Representatives in late April, and the House of Councillors on 25 May, 2016. It’s expected to come into force within a year.
Virtual, digital and crypto-currency exchange operators (*) will be required to register with the Japanese Financial Services Agency (JFSA); and the JFSA will be empowered to carry out on-site supervisory visits and issue administrative orders.
The Bill also makes it easier for banks, and bank holding companies, to invest in other businesses, a move that’s expected to enable them to invest in and acquire FinTech companies and FinTech company service providers over time. If that happens, Japanese policy makers hope the Japanese bank and non-bank FinTech sector will be able to flourish, at last.
The Bill is part of a concerted effort by the Japanese authorities to encourage FinTech businesses to start and grow in Japan. In April 2016, the Japanese Minister for Financial Services noted that “the development of FinTech such as block-chain technology is now a rapidly emerging [and] important topic for market participants to address intentionally“; and that discussions need “to be held on what kind of solutions we should prepare in order to enhance the competitiveness of our markets“, which have struggled with FinTech as a sector and concept so far. For that reason and others, the JFSA has established a Panel of Experts on FinTech Start-ups, which is “aiming to set up a framework in which experts discuss possible measures to create a ‘FinTech ecosystem’ and the possible impacts on financial services by the trend of FinTech, etc.” There’s a list of the Panel Members here; some information about the Panel and the procedures for running it here; the Panel secretariat’s Explanatory Material is here; and the introductory material provided by Panel Member Joichi Ito (a director of MIT Media Lab) is here. These materials provide some useful insight into the most immediate FinTech issues facing Japanese policy makers, investors and entrepreneurs.
More to follow.
(* Although the Japan Times only refers to virtual currency exchanges, it’s said that the Bill defines virtual currencies as “asset-like values” that can be used in making payments and can be transferred digitally. We think this implies that digital and crypto-currency exchanges are covered by the Bill as well, but we can’t confirm this yet.)