Japan proposes lightweight legislation for cryptocurrency intermediary institutions
On November 29, Japan is considering implementing new lightweight legislation for cryptocurrency intermediary institutions (not cryptocurrency exchanges). Last week, the Financial Services Agency (FSA) presented its ideas to the Payment Services Working Group of the Financial System Committee.
The FSA gave an example where a gaming application or self-hosted wallet provides access to third-party applications for cryptocurrency trading services and then switches back to the original application. In many cases, the FSA may consider that app operators act as intermediaries and therefore need to register as a cryptocurrency exchange. However, if an organization purely acts as an introducer without ever touching any funds, this can be quite burdensome.
Therefore, the government is considering some more relaxed proposals requiring intermediary institutions to register as intermediaries. Intermediary institutions have an obligation to provide information to users. They will be subject to advertising restrictions and could potentially bear liability for damages in case of problems.
The FSA is contemplating how losses should be handled. Currently, regulations require other financial service intermediaries not belonging to large groups pay margin money against potential losses. If intermediary institutions are affiliated with a cryptocurrency exchange then losses might be borne by that exchange.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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