The Japanese Financial Services Agency has been overhauled in order to deal with fintech-related fields, including cryptocurrencies
Japan has overhauled its financial regulator, the Financial Services Agency (FSA), in order to better deal with fintech-related fields, including cryptocurrencies, news outlet Nikkei Asian Review reported July 17. Changes were made to various bureaus in order to make the organization more suited to address new problems and challenges in the financial sector.
Starting today, the newly created Strategy Development and Management Bureau, which replaced the Inspection Bureau, will reportedly develop a financial strategy policy and handle issues addressing the digital currencies market, fintech, and money laundering. Additionally, the bureau will be responsible for administrative duties and inspection of financial institutions.
The Policy and Markets Bureau will succeed the Planning and Coordination Bureau, and is tasked with developing a legal framework that addresses the rapid growth of the fintech sector. The Supervision Bureau remained unchanged.
The FSA has initiated enforcement actions against several crypto exchanges this year. In March, the agency sent “punishment notices” to seven crypto exchanges and temporarily halted the activities of two more after a round of inspections. Last month, the FSA issued business improvement notices to five registered exchanges, alleging that the exchanges lacked proper internal management systems, including anti-money laundering measures.
Earlier this month, the FSA announced it was considering changing the legal framework for regulation of cryptocurrency exchanges. The FSA was planning to regulate crypto exchanges via the Financial Instruments and Exchange Act (FIEA), instead of its legal foundation, the Payment Services Act. This reportedly means that exchanges will have stronger customer protections. The FIEA obliges securities companies to manage customer funds and securities, such as stocks, separately from corporate assets.
In June, Japan’s Minister of Finance Senator Fujimaki asked Deputy Prime Minister Taro Aso whether crypto transactions should be taxed via a “separate settlement taxation,” rather than their current classification as “miscellaneous income.” Aso said the prospect was “doubtful” citing concern over the public’s reaction due to “tax fairness.” Changing the tax scheme would bring the current tax rate for crypto transactions from a maximum of 55 percent to a 20 percent flat tax similar to stocks or forex trades.