Japan’s National Diet recently passed the revised Payment Services Act (PSA), bringing about significant changes for enterprises involved in the crypto industry. The new category of “intermediary business” aims to streamline the registration process for companies acting as liaisons between exchanges and users. This new classification eliminates the need for these intermediaries to register as exchanges with the Financial Services Agency (FSA), offering a separate registration system with more relaxed rules.
The amendments to the Payment Services Act have been hailed as pro-crypto, with the establishment of intermediary businesses receiving particular attention. Companies like Mercari, SBI Securities, and Monex Securities have expressed interest in registering as intermediaries under the new law. Some key changes introduced by the amended act include the creation of a legal order requiring overseas-based crypto firms to hold assets in Japan to prevent outflows in case of bankruptcy, as well as the ability for stablecoins to hold assets partially in low-risk investments like government bonds.
The revised law, set to take effect within a year, emphasizes strict anti-money laundering and counter-terrorism financing requirements for registered exchange operators and e-commerce collection agencies. While the amendments aim to facilitate entry into the regulated crypto ecosystem for intermediary businesses, critics argue that the law moves further away from Satoshi Nakamoto’s original vision of decentralization and separation of money from the state.
The crackdown on foreign payment agents labeled as cross-border “collection agencies” raises concerns about the potential stifling of competition and innovation in the crypto space. While the FSA assures that low-risk intermediaries will not be targeted, there are fears of overregulation that could hinder the growth of the industry. Despite the tightening regulations, advocates of peer-to-peer transactions see continued use of actual crypto as a pathway to economic freedom in Japan.
Overall, the amendments to the Payment Services Act signal a shift towards greater centralization and stricter rules in Japan’s crypto landscape. As the industry continues to evolve, finding a balance between regulation and innovation will be crucial for fostering a vibrant and sustainable crypto ecosystem in the country.