Cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and others offer a number of advantages compared with fiat currencies. Nevertheless, the process of crypto adoption will take time, due to various reasons. One of them relates to crypto regulations and how to enforce such regulations.
As a reminder, in 2019 the Japanese House of Representatives passed the Payments Services Act (PSA) and Financial Instruments Exchange Act (FIEA). The purpose of those acts is to regulate crypto. Initially, the laws mentioned above were scheduled to come into effect starting from April.
However, according to an official government newspaper, revised versions of PSA as well as FIEA would be enforced starting from May 1.
Crypto industry and existing regulations
People should take into consideration that there are no official laws to regulate crypto in Japan. As a result, the only way at this time for digital assets to have any kind of legal status is to amend existing regulations.
Let’s have a look at the Payments Services Act. For example, the revised version of PSA contains many changes and some of them are quite basic. For example, according to the revised version, people should use updated terminology, instead of “virtual currency” they should use “crypto asset”.
However, there are more important changes as well, such as tightening restrictions on crypto custodians.
Furthermore, starting from May 1 crypto exchanges will have to manage users’ money separately from their cash flows. As a result, exchanges should find a third-party operator to keep hold of their clients’ money. Third-party operators should use reliable methods like cold wallets for this task.
Moreover, there are other important changes as well. Crypto exchanges should hold the same kind and the same quantities of crypto assets for the clients who insist on using hot wallets. This way exchanges will be able to reimburse their users in case someone steals their assets.