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Japanese exchanges are responding to the revision of the current crypto laws

May 19, 2020

Bitbank, a Japanese cryptocurrency exchange, has started making changes to comply with the country’s revised Payment Services Act (PSA)., valid from May 1st.

Bitbank’s Atsushi Kuwabara spoke to Cointelegraph about how local exchanges and regulators would respond to changes in crypto-related laws first proposed by the Japanese House of Representatives in 2019.

Crypto with a different name

According to the changes to the PSA, all references to “virtual currency” must be replaced by the term “cryptoactive”.

Japanese exchanges are responding to the revision of the current crypto laws
Japanese exchanges are responding to the revision of the current crypto laws

Cointelegraph has reported that the country’s self-regulatory group, the Japan Virtual Currency Exchange Agency (JVCEA), changed its name to Japan Crypto Asset Exchange Agency. although it’s still called JVCEA. Kuwabara said Bitbank will change its website and all contributions to reflect these changes.

Manage users’ money separately

As of May 1, crypto exchanges operating in Japan will have to manage their users’ money separately from their own cash flows. This means finding an external operator who will keep users’ money in a trust bank or in a separate bank account maintained by the exchange.

However, the Japanese Cabinet Ordinance updated these restrictions in April and requires, among other things, that users’ money be trusted. In response to such upcoming regulations, Cryptocurrency exchange BitMEX stopped operating in Japan on April 28.

How assets are cared for

According to the PSA guidelines Exchanges must now use “trusted methods” to manage users’ money. The regulations cite cold purses, but mention that hot purses can be used as long as they contain “the same type and amount of crypto assets” as users’ crypto assets. This would allow any exchange to reimburse users if money is stolen.

refund policy

Other reimbursement methods proposed by PSA may have been in response to the notorious hack on the Mt. Gox Japanese exchange. Who still has some holders waiting for their money.

Under the new PSA, the Japanese Cabinet Ordinance and the Financial Services Agency (FSA) guidelines, Every user who sends crypto assets to an exchange has a “priority return right” for each asset.

If a stock exchange files for bankruptcy, as was the case with Mt. Gox, the user can receive compensation that is preferred to other creditors.

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