JAPAN Law and Practice Contributed by: Ken Kawai, Shunsuke Aoki, Takeshi Nagase and Keisuke Hatano, Anderson Mori & Tomotsune
10.5 Regulation of Blockchain Asset Trading Platforms Trading Platforms for Crypto-Assets An operator of a trading platform for purchases, sales or exchanges of crypto-assets is regulated under the PSA. More specifically, a person who engages in intermediary, brokerage or agency activities for the trading or exchange of crypto- assets as a business is regarded as a CAESP and is required to register under the PSA. A typi - cal example of a CAESP is a regulated crypto- asset exchange, such as bitFlyer or Coincheck. See 10.9 Decentralised Finance (DeFi) regard - ing peer-to-peer trading platforms for crypto- assets. Trading Platforms for NFTs See 10.12 Non-Fungible Tokens (NFTs) . Trading Platforms for Digital Securities 25 December 2023 saw a highly anticipated first secondary trading of digital securities on a PTS (ie, an equivalent of an alternative trading system in the USA). The PTS, known as START, is oper - ated by Osaka Digital Exchange Co., Ltd under the FSA’s authorisation. Currently, only six issues of digital securities are traded on START, but this is expected to increase in the near future. The regulator’s attitude towards the secondary market for digital securities is stringent, so the introduction of a pure peer-to-peer trading plat - form for digital securities in Japan will require careful analysis as to its legality – as well as significant discussion with the FSA, particularly from the consumer protection viewpoint. 10.6 Staking There are no provisions for staking under Japa - nese law. Accordingly, the staking of one’s own crypto-assets or becoming a validator is not regulated in Japan. It should be noted, however,
that if staking service providers manage the pri - vate keys of users’ crypto-assets, crypto-asset custody service regulations may apply. In addi - tion, fund regulations might apply if the stak - ing service providers distribute rewards to and impose slashing penalties on their users. 10.7 Crypto-Related Lending Under Japanese law, crypto-asset lending ser - vices do not constitute the conduct of money- lending business, which is regulated under the Money Lending Business Act, as no money lending is involved. It should be noted, howev - er, that crypto-asset custody service regulations may apply where a service is considered provi - sion of crypto-asset custody services, and not lending of crypto-assets. According to the Cryp - to Asset Guidelines issued by the FSA (Crypto Asset Guidelines), one factor that distinguishes between lending and provision of custodial ser - vices is whether users can withdraw their assets at any time or whether there is a specific required period of non-withdrawal. 10.8 Cryptocurrency Derivatives The amended FIEA, which came into force on 1 May 2020, includes specific regulations on crypto-asset derivatives. As a consequence of the inclusion of “crypto-assets” and stand- ardised instruments of crypto-assets created by financial instruments exchanges within the definition of “financial instruments” , as well as the inclusion of crypto-asset prices, interest rates, etc, within the definition of “financial indi - cators” , respectively, crypto-asset derivative transactions are now subject to the provisions of the FIEA, regardless of the type of derivative transactions involved. For instance, provision of OTC crypto-asset derivative transactions or acting as an intermediary or broker in relation thereto constitutes Type I Financial Instruments Business under the FIEA. Accordingly, a com -
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