In March 2021, two years after the FATF published its original guidance for a risk-based approach to virtual assets (VAS) and virtual asset service providers (VASPs),” the FSA addressed a request for notification of information about the originator and the beneficiary after the transfer of crypto assets (“request”) to the jvcea. the request mentioned that jvcea should introduce self-regulatory rules regarding travel rule by april 2022. in april 2022, jvcea introduced travel rule in association self-regulatory rules for crypto asset transfer transactions.
- are cryptocurrencies legal in japan?
yes, cryptocurrencies are legal in japan. The Payment Services Act defines “crypto assets” as payment methods that are not denominated in fiat currency and can be used to pay unspecified persons. there are no restrictions to own and invest in cryptocurrencies.
Reading: Is bitcoin legal tender in japan
- are there aml crypto regulations in japan?
yes. Exchange providers in Japan are subject to the anti-money laundering regime outlined in the Law on Prevention of Transfer of Criminal Proceeds. this framework is further specified in the guidelines for the fight against money laundering and the financing of terrorism, in force since February 19, 2021.
The payment services law defines exchange providers as entities that perform any of the following crypto-asset exchange services as a business:
- sale, purchase and exchange of crypto assets;
- intermediation, brokerage or acting as an agent in the activities mentioned in 1;
- management of the client’s money in connection with the activities mentioned in 1 or 2;
- administration of crypto assets for the benefit of another person.
3. is the crypto travel rule mandatory in japan?
yes. In April 2022, jvcea introduced the travel rule in the association’s self-regulatory rules for crypto-asset transfer transactions carried out by its members at the request of end customers.
4. who regulates cryptocurrencies in japan?
See also: General 20+ tsm earnings 2021 best
the financial services agency (fsa) oversees crypto asset exchange service providers (casps) in japan. however, the fsa recognizes and works closely with two self-regulatory entities for the cryptocurrency industry: the japan virtual currency exchange association (jvcea) and the japan security token offering association (jstoa). jstoa focuses on token offerings and other crowdfunding events. the jvcea has the mandate to create rules and policies applicable to cryptocurrency exchanges.
fatf travel rule requirements in japan
1. Are there licensing or registration requirements for vasps in japan?
japan’s payment services law requires crypto exchange service providers to register with the financial services agency. the following acts qualify as crypto asset exchange services:
- sale, purchase and exchange of crypto assets;
- intermediation, brokerage or acting as an agent in the activities mentioned in 1;
- management of the client’s money in connection with the activities mentioned in 1 or 2;
- administration of crypto assets for the benefit of another person.
2. when does japan’s crypto travel rule go into effect?
In April 2022, the jvcea introduced the travel rule in the association’s self-regulatory rules for crypto asset transfer transactions. however, these rules provide for a transactional period (between April 1 and October 1, 2022) during which the travel rule obligations apply to a narrower scope of transactions.
3. does japan allow a grace period to comply with the crypto travel rule?
During a transition period (between April 1 and October 1, 2022), the travel rule obligations only apply if:
- the originating client is also the beneficiary of the transaction;
- the beneficiary vasp is Japanese;
- the asset being transferred is eth or btc;
- the transaction amount is greater than ¥100,000.
In addition, certain information collection obligations do not apply during this transition period. The obligation to collect the physical address of the beneficiary and the object of the operation only apply as of October 1, 2022.
Finally, during the transition period, vasps can adopt a “best efforts approach” for certain obligations:
- the obligation to collect information about the sender that is reasonably available and necessary to assess the risk of the transaction when a deposit is received without the required travel rule information;
- the obligation to apply alternative risk mitigation measures when facilitating withdrawals to private wallets or to vasps based in jurisdictions where the travel rule is not yet in force.
4. what is the minimum threshold for the crypto travel rule in japan?
See also: View and export your trading history with the All Trades Report
During a transition period (between April 1 and October 1, 2022), the travel rule requirements only apply to transactions over 100,000 yen. however, no minimum threshold is mentioned after the transition period.
5. what personally identifiable information is required to share for the japan crypto travel rule?
information about the originating client:
- name;
- wallet address used to send funds;
- geographical address or customer identification number.
information of the beneficiary client:
- name
- wallet address
§c of the translated version of notabene:
📌 according to §d of notabene translated version: as of October 1, 2022, the originating vasp is also required to charge the beneficiary the customer’s physical address and the purpose of the transaction. the current understanding is that the obligation is to collect, but not transmit, these data points.
why choose notabene for crypto travel rule compliance in japan?
notabene’s solution is available and can be used by vasps to meet the requirements of local travel regulations today. most importantly, through notabene, vasps can identify whether the counterparty’s wallet is custodial or self-hosted and take appropriate action for each scenario. complying with the travel rule requires significant changes to the existing ux and data flows of vasps. In light of this, we allow a staggered rollout of our solution and promote testnets for vasps to take their first steps toward compliance in a simulated environment.
relevant links:
See also: China&x27s top regulators ban crypto trading and mining, sending bitcoin tumbling | Reuters
- global legal knowledge | Blockchain and Cryptocurrency Laws and Regulations 2021 – Japan
- The Japanese National Police Agency | law on the prevention of transfer of criminal proceeds
- complyadvantage | cryptocurrency regulations in japan
- japan sto association | publication of articles of incorporation
- jvcea – japan crypto and virtual asset exchange association | home
- japan financial services agency | home
- jvcea | travel rule in the self-regulatory rules of the association (Japanese)
- jvcea | travel rule in the self-regulation rules of the association (English)
