Japan Eyes Law Revision to Prevent Crypto Asset Outflows

Tokyo, Nov. 7 (Jiji Press)--Japan's Financial Services Agency on Thursday proposed creating a bill to revise the payment services law to prevent outflows of crypto assets of Japanese investors to other countries.

The revision, proposed at a working group of the Financial System Council, would allow the FSA to order crypto asset exchanges to keep the assets of their customers in Japan within the country, so that the assets will be protected in case crypto exchanges based abroad go bust.

The current payment services law has no provision on such an order.

When U.S. cryptocurrency exchange FTX Trading Ltd. collapsed in 2022, the government was able to issue such an order under the financial instruments and exchange law because the company had a Japanese unit registered as a financial business under the law.

However, if an overseas exchange registered only under the payment services law goes bankrupt, the government cannot prevent an outflow of customer assets from Japan since the law does not allow it to issue such an order.

[Copyright The Jiji Press, Ltd.]