Japan will introduce revised "crypto-friendly" payment services law

Table of Contents

Japan’s Domestic Diet Senate passed the revised Payment Services Act (PSA) on Friday, bringing a major change to crypto companies. The new category of “intermediation businesses” reduces the need for Japanese intermediaries to register as exchanges, but the bill has other meanings, some of which bring about stricter rules and greater centralization. The amendment to the Payment Services Act, originally submitted to Japan Diet in March and passed Friday, has been praised as a pro-crypto. Perhaps the most attention-grabbing thing is the establishment of a new category of “brokerage,” meaning businesses that refer or act as communicators between exchangers and users as communications. Such groups will no longer be required to register as an exchange with the government’s regulatory authority, Financial Services Agency (FSA). These intermediaries will be introduced with separate registrations with relaxed rules.

Image: Chihiro Sakai.

What the new law has: stubcoins, brokerage businesses, emergency leak barriers

Under the FSA’s debate since November last year, the revised payment services law is cited by local media that are likely to remove gaming companies and other barriers that want to do business related to cryptocurrency and digital assets. Interest on Mercari, SBI Securities and Monex Securities have already been reported for registration as “brokerage operations.” Some important changes to the law include:

Creating a “broker” business with relaxed registration rules.
Creating a separate registration system for replacement.
A new ability to issue legal orders requiring overseas-based crypto companies to hold assets in Japan to prevent leaks in the event of bankruptcy.
“Trust Type” stubcoin backing assets can now be held partially (up to 50%) with low-risk investments like government bonds, rather than being 100% supported by Fiat by the issuer.
The stricter rules for companies that are considered overseas “collecting agencies” that provide e-commerce services.

The FSA chart details changes to trusted Stablecoin regulations. Source: FSA.

The amended laws set to take effect within a year essentially strengthen AML/CFT requirements and regulations for registered exchange operators and e-commerce collection institutions, making it easier for liaison businesses to enter the regulated crypto ecosystem (which must be under the supervision of registered operators) to prevent international exchanges to resolve issues with Japanese users.

Centralization, stricter rules – more floating from Satoshi

While it is understandable that gaming companies and others are willing to hear news of successful revisions and the removal of barriers to entry, advocates based in Tokyo and Japan remove the original idea of law for the original idea of separation of money and nation. Or more precisely poison apple. Large banks are now able to issue stubcoins more easily and leverage state credits, but overseas, unauthorized markets and competitors are even more targeted as threats. As CoinPost reported in 2022 by Mitsubishi UFJ Working Group, it focuses on Stablecoins. “The goal is to halt funds primarily overseas stable situations, including covering overseas Web3 (decentralized apps) projects, the use of major NFT markets, and even transactions at Cryptocrenceange.”

Companies that process money that is considered a cross-border “collector” involved in activities such as e-commerce can also be regulated under the revised PSA. Source: FSA.

The crackdown on foreign payment agents, considered cross-border “collection agents,” is a slippery slope, including those involved in e-commerce. The FSA says it will not engage in low-risk activities or require registration from low-risk intermediaries, but it threatens online casinos and fraud crackdowns and says “people who carry out illegal remittances such as online casinos and investment fraud are subject to regulation as unregistered companies.” Like all laws, arbitrary political interpretation allows for endless abuse. Previously, cross-border collection agencies were not required to register as fund transfer projects with the state. Now they must rely solely on the guarantees of the FSA in relative range. Fortunately, for defenders of peer-to-peer unauthorized transactions, no matter what the new regulations bring, the actual use of crypto is unregulated, bank-issued stubcoins – a misconception of Japan’s one path to economic freedom and peace, circular, rice cultivation, and mainstream concordance.