Japan will include provisions on cryptocurrencies in the Law on Financial Instruments and Exchanges
Japan’s Council of Ministers this Friday proposed a number of amendments to the Law on Financial Instruments and Exchanges and the Law on Financial Settlements aimed at consolidating certain rules of regulation of the cryptocurrency market, according to the local publication Nikkei.
The Financial Instruments and Exchanges Law is the main regulatory document in Japan that defines the principles of transactions in the securities markets and the operations of related companies. It aims to ensure the safety of investors and transparency of the markets by establishing clear requirements for transactions in securities and financial derivatives..
As noted by the Nikkei, the updated version of the law will include several key clauses related to cryptocurrencies. First, digital currencies will be categorized as cryptographic assets, in line with the G20 definition. Companies providing cryptocurrency exchange services will receive the status of “agents for the exchange of cryptographic assets”.
The updated law will also require cryptocurrency exchanges to use cold wallets to store their clients’ funds. If, to store cryptocurrencies, they need to use an infrastructure that has a constant connection to the network, such assets must be provided with their own financial resources..
Cryptocurrency margin trading will be governed by the same rules that apply to foreign exchange markets. In addition, cryptocurrency companies are not allowed to use promotional materials that encourage speculation and indulge in dishonest market practices such as insider trading and price manipulation..
In mid-December, the Japanese Financial Services Agency (FSA) added cryptocurrencies to a new legal category called “crypto assets”.