Due to the rapidly evolving nature of the fintech sector, the government of Japan has had to impose radical changes on its principal financial regulatory agency, the Financial Services Agency (FSA). According to reports, the overhaul will affect multiple bureaus as the government aims to curb the challenges facing the country’s financial industry.
One of the new introductions includes the Strategy Development and Management Bureau which was formerly known as the Inspection Bureau. Purportedly, this agency is charged with the formulation of strategic policies concerning the cryptocurrency markets, money laundering and fintech. Moreover, this bureau will also be the oversight authority for all financial institutions as well as the imposition of administrative duties.
Additionally, the Planning and Coordination Bureau will be reformed into the Policy and Markets Bureau. The mandate for this body will be the development of regulations to govern and control the rapidly changing fintech sector. Notably, the Supervision Bureau was not affected by this reshuffling process.
Since the beginning of 2018, the FSA has enforced legal measures against several digital currency trading platforms. After inspecting suspicious exchanges on multiple occasion, the regulatory watchdog issued cease order against two platforms, with an additional seven receiving stern warnings. Furthermore, the FSA served five exchanges with business improvement orders in June, primarily because the platforms did not comply with the set regulations, mostly the deployment of effective anti-money laundering measures.
At the beginning of July, the FSA declared its intentions to amend the laws concerning the regulation of digital currency trading platforms. Precisely, the agency stated that it would govern cryptocurrency exchanges using the Financial Instruments and Exchange Act (FIEA), rather than through its native legal framework, known as the Payment Services Act. Apparently, the newer act favors the crypto investors, as it requires the exchanges to distinguish the management of customers stocks from corporate assets.
Last month, Japan’s finance minister posed a question to the nation’s deputy premier, asking him whether cryptocurrency trading should be classified under separate settlements instead of miscellaneous income during taxation. In response, the deputy prime minister said that such an approach is likely to raise concern amongst the public as it would drastically reduce the tax rates from 55% to a flat rate of 20%.