JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
its website as “crypto-assets widely handled in Japan” and crypto-assets for which JVCEA Pre- Assessment is not required when handled by a Green List Eligible Member if they meet all of the following four criteria: • crypto-assets that have been handled by three or more member CAESPs; • crypto-assets that have been handled by one member CAESP for at least six months; • crypto-assets for which the JVCEA has not set any ancillary conditions for handling; and • crypto-assets that are not deemed inap - propriate by the JVCEA under the Green List Regarding transactions of crypto-assets, the JVCEA’s self-regulatory “Rules Concerning Development of Order Management Systems for Crypto-Asset Exchange Services” regulates the system for order management in CAESPs by stipulating the processes necessary to carry out proper business operations regarding accept - ance of orders and processing of contracts from users when CAESPs carry out transac - tions related to the exchange of crypto-assets with users. Specifically, CAESPs are required to formulate internal rules for the development of order management systems in order to control unfair transactions and to execute transactions on the best terms. 6.6 Rise of Peer-to-Peer Trading Platforms Recently, decentralised exchanges (DEXs) – ie, exchanges of crypto-assets accessible to the general public – have emerged as a form of decentralised finance. Their trading volume has rapidly increased in the past few years. System for any other reason. 6.5 Order Handling Rules
Under Japanese law, there are no specific regu - lations for DEX. However, if the services provid - ed by DEXs fall within regulated activities under the existing law, such DEXs may be subject to the relevant regulations. More specifically, DEXs may be subject to the regulations on CAES as an intermediary for the sale or exchange of crypto- assets under the PSA. However, DEXs are characterised as decen - tralised exchanges with no specific centralised administrator. Therefore, if DEXs are so decen - tralised that no specific operator is conceivable and the person required to register as a CAESP is not conceivable, it would be difficult to apply the PSA to such an operator in a practical man - ner. 6.7 Rules of Payment for Order Flow There are no specific regulations on payment for order flow in Japan. 6.8 Market Integrity Principles The purpose of the FIEA is to ensure fairness in the issuance of securities and in transactions of financial instruments, etc, in order to facilitate the circulation of securities, ensure fair price formation of financial instruments and – via full operation of the functions of capital markets – contribute to the sound development of the national economy and the protection of inves - tors. Accordingly, the FIEA prohibits any person from engaging in unfair transactions in respect of the purchase and sale of securities, other trans - actions, or derivative transactions. As regards crypto-assets, there have been cases in which undisclosed information (ie, the com - mencement of handling of a new crypto-asset) was leaked outside a CAESP and those who obtained such information allegedly profited from it. The FIEA also prohibits any person from
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