JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
2. Fintech Business Models and Regulation in General 2.1 Predominant Business Models In Japan, almost every area of finance has been benefiting from robust fintech innovation. Online or mobile payment services, cryptocurrency- based businesses and other blockchain-based tokens, robo-advisers and financial account aggregation services that utilise OpenAPI (Appli - cation Programming Interface) are among the predominant sectors. One indication that the fintech business is maturing is the shift in major players from fin - tech start-ups to well-established companies (such as traditional major financial institutions and telecommunications companies). 2.2 Regulatory Regime Apart from the regulations applicable to crypto- asset exchange services (CAES) and EPI ser - vices, there is no specific regulatory framework for fintech businesses. If the services provided by the fintech companies are subject to existing financial regulations, such as obtaining applica - ble authorisation (licences or registrations), then they are required to comply with them. What fol - lows is a high-level outline of the regulations that apply to popular fintech services. Online/Mobile Payment Although there are many payment methods and instruments in Japan, there is no comprehensive payment law. A prepaid payment instrument (PPI) is an instru - ment that records a certain value charged in advance of its use and is then debited as pay - ment of consideration for goods and/or services. PPIs are regulated under the PSA.
Instalment payments made in consideration for goods or services that are divided over two months or more are regulated under the Instal - ment Sales Act. The Act substantially covers all credit card payments and BNPL services. Remittance or money transfer is regulated pur - suant to the Banking Act and the PSA. The PSA classifies fund transfer services (FTS) into the following three categories: • FTS involving remittances exceeding JPY1 million per transaction; • FTS that correspond to the current classifica - tion of FTS in the PSA; and • FTS involving remittances of small amounts (ie, several tens of thousands of yen). Services Related to Crypto-Assets CAES providers (CAESPs) are regulated under the PSA. Most of the so-called payment tokens and utility tokens would fall within the definition of a crypto-asset. Those who provide CAES (or custody services thereof) must register with the FSA. Crypto-asset derivatives are regulated as finan - cial derivatives under the Financial Instruments and Exchange Act (FIEA). A company that pro - vides crypto-asset derivatives products has to undergo registration as a Type 1 Financial Instru - ments Business Operator (Type 1 FIBO). Digital Securities Amendments to the FIEA that came into effect in May 2020 introduced a new regulatory frame - work for the transfer of securities via electronic data processing systems. An issuer of tokenised securities is, unless exempt, required to file a securities registration statement and issue a pro - spectus upon making a public offering or sec - ondary distribution. Any person who engages in
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