A major change is about to occur in Japan's cryptocurrency market. News has emerged that the Financial Services Agency has fundamentally revised the regulatory framework for cryptocurrencies and has submitted a new bill to the Diet to significantly strengthen user protection.

What’s noteworthy is that the regulation of cryptocurrencies, which had been handled under the Payment Services Act, will now be transferred to the Financial Instruments and Exchange Act. In other words, the FSA is signaling its intention to manage cryptocurrencies within a more stringent financial regulatory framework.

Looking at the contents of the bill, it includes quite comprehensive measures. Strengthening information disclosure based on whether issuers are properly complying with regulations, establishing a new category called "Crypto Asset Trading Business" to tighten oversight of operators, significantly enhancing penalties for unregistered operators, improving insider trading regulations, expanding the scope of administrative fines, and more. Shigemitsu Shimizu, the head of the FSA’s Risk Analysis Division, explained these details in depth at the 9th BCCC Collaboration Day.

Another point to watch is the pilot project for the pre-emptive settlement business that the FSA is simultaneously promoting. Major banks are participating in issuing yen-backed stablecoins to verify the efficiency of cross-border payments. Additionally, a system utilizing blockchain technology has been implemented to record and settle the transfer of rights for government bonds, corporate bonds, investment trusts, and stocks continuously 24 hours a day. Progress is also being made on building a tokenized deposit transfer mechanism between banks, linked to the Bank of Japan’s central bank account tokenization project.

Alongside stricter regulations, the FSA is actively promoting the practical application of blockchain technology. It seems their strategy is to run these two wheels simultaneously. While aiming for the maturity and sound development of the cryptocurrency market, they also seek to enhance the convenience and diversification of financial services overall. I find this direction quite intriguing.