JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
practical option. However, underwriting transactions – ie, the transfer of loan receivables immediately after a loan transaction – are not usually entered into. Instead, a loan provider is more likely to sell the loan receiva - bles for financial purposes after it has had sufficient time to observe performance of the loan receivables. 4.3 Sources of Funds for Fiat Currency Loans Most of the funds raised for loans are lender-raised capital. Securitisation of online lending receivables has not been typical and it is also uncommon to raise funds for specific lending transactions from general investors. 4.4 Syndication of Fiat Currency Loans Online lending services in the form of syndicated loans are not available in Japan. 5. Payment Processors 5.1 Payment Processors’ Use of Payment Rails A payment rail widely used by traditional banks in Japan for domestic fund transfers is the Japanese Banks’ Payment Clearing Network, also known as “Zengin Net”. However, it is not mandatory for banks or fund transfer service providers to use this payment rail. Indeed, more and more fintech service providers are offering fund transfer services or other payment services that do not involve existing payment rails, such as services using stablecoins. 5.2 Regulation of Cross-Border Payments and Remittances Remittances of funds from Japan are generally permit - ted except in limited cases involving restrictions under the Foreign Exchange and Foreign Trade Act (FEFTA). Specifically, the FEFTA prohibits (i) remittances to des - ignated parties such as terrorists, and (ii) remittances conducted for designated purposes such as contribu - tions to North Korea’s and Iran’s nuclear activities. Where any resident in Japan makes a remittance exceeding JPY30 million to a destination outside Japan, such resident must also file a Payment Report to the Bank of Japan (after the remittance) through the bank or fund transfer service provider used by the
remitter to make the fund remittance, in accordance with the FEFTA.
6. Marketplaces, Exchanges and Trading Platforms 6.1 Permissible Trading Platforms In Japan, marketplaces are governed by laws and reg - ulations, depending on the type of financial instrument in question – for example, securities such as stocks are regulated by financial instruments exchanges under the FIEA. Commodities such as gold or crude oil, on the other hand, are regulated by commodity exchanges under the Commodity Futures Act. Cryp - to-assets are regulated by CAESPs as marketplaces under the rules of the PSA. See 6.2 Regulation of Different Asset Classes . 6.2 Regulation of Different Asset Classes As mentioned in 6.1 Permissible Trading Platforms , financial instruments are regulated under different laws and regulations, depending on their type. Secu - rities such as stocks are regulated by the FIEA and are classified as Paragraph I Securities (defined in 10.4 Regulation of “Issuers” of Blockchain Assets ) or Paragraph II Securities (also defined in this section) based on their degree of tradability, and are subject to strict registration requirements, disclosure regulations and conduct rules. Commodities such as gold or crude oil are regulated under the Commodity Futures Act and are subject to regulations similar to those for securities under the FIEA. However, the competent authority in respect of commodities is not the FSA but the Ministry of Agri - culture, Forestry and Fisheries or the METI. The dis - closure requirements applicable to commodities are not as strict as those applicable to securities. Crypto-assets are regulated under the PSA and CAESPs that provide a venue for the trading of crypto- assets are subject to regulation. As is the case with securities under the FIEA, CAESPs are subject to strict registration requirements and conduct rules. The PSA does not impose strict disclosure regulations (as it does on securities) because the purpose of the PSA is limited to ensuring fairness of settlement instruments.
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