Japan’s New Bitcoin Law Imposes Strict Compliance Requirements
Over the past few months, a lot of people in Japan have gotten excited about bitcoin and other cryptocurrencies. That came as somewhat of a surprise, considering Japan was not often mentioned in the cryptocurrency world. A new law will be introduced in the country this year, which has a lot of experts concerned. In fact, some people even think the new law will be worse than BitLicense.
What Does Japan Have In Store for Bitcoin?
While the media outlets have seemingly taken a liking to bitcoin and cryptocurrency, that success could be rather short-lived. Even though the Japanese government applauded the new law as a “progressive step”, it remains to be seen if all of this optimism is justified. Many people believe the new law will validate bitcoin as legal tender in Japan, that may not be the end goal of this new legislative proposal by any means.
As one would expect from any form of legislation revolving around bitcoin, consumer protection remains the top priority. When the BitLicense was introduced that bill also aimed to protect consumers, even though it ended up nearly destroying the bitcoin ecosystem in New York state. Considering how Japan has fallen victim to quite a few cryptocurrency scams already, protecting consumers is a top priority.
Unfortunately, it would appear this new law bears other, less positive resemblances to BitLicense as well. Virtual currency trading businesses will need to prepare and submit a long list of papers and follow strict requirements. For instance, the companies need at least US$100,000 in reserve capital. Additionally, they will need to join a government-appointed industry association and frequent reports to the authorities. Moreover, all companies must undergo external audits on a regular basis.
While none of the above may sound excessive, the whole ordeal will cost companies around US$300,000 or more. That is quite a steep price most companies may not be willing to pay at this time, as it does not guarantee companies will be officially licensed by default. Then again, any company dealing with customer funds should have expected this type of regulation sooner or later.
What is rather unfortunate is how this law will apply to a lot of bitcoin companies, even if they are not an exchange or the lending service provider. Smaller companies not holding custody of user funds may fall under these same guidelines, which would effectively put them out of business before they can even enter the market. At the same time, people need to realize this type of regulation does not affect bitcoin itself.
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