Japan is famous for its companies such as Toyota, Sony, Honda, etc. It is not surprising that foreign companies would like to enter the local market. Moreover, the crypto industry is not an exception. However, foreign crypto exchanges should be ready to deal with strict regulations.
Recently, a Japan-based law firm released a report covering all aspects of crypto assets in the country. The game developer Double jump.tokyo founded a law firm called So & Sato. Importantly, this firm works with crypto and blockchain as the game developer founded this firm to cover this industry.
Strict regulations are not as bad as it may appear at first glance. Moreover, according to this law firm, strict regulations would be beneficial in the long run.
Local regulations are quite strict in comparison with most countries around the world. Nevertheless, thanks to strict regulations it is easier to attract traditional financial institutions.
As a reminder, the crypto industry is regulated according to the Payment Services Act (PSA) and the Financial Instruments and Exchange Act. In 2019, Japan passed amendments to tighten existing regulations.
According to new PSA regulations, crypto exchanges must employ third party operators. The purpose of this regulation is to keep money that belongs to clients separately from their cash flow.
Crypto exchanges and legal aspects
As can be seen from the information stated-above, it not an easy task to operate a crypto exchange in Japan. Moreover, foreign crypto exchanges should take into account that to operate in this country, they must hold a license in both in their jurisdiction as well as Japan.
Companies that would like to enter the local market should file an application with the country’s Financial Services Agency.
Last but not least, currently there are 23 crypto exchanges according to the Financial Services Agency. All of the licenses belong to local exchanges.