Bitbank, the Japanese cryptocurrency exchange, has begun implementing changes to make it compliant with the country’s revised Payment Services Act (PSA), with effective May 1.
It has been reported that Atsushi Kuwabara from Bitbank said how local exchanges and regulatory bodies would be responding to modifications of cryptocurrency-related laws first proposed by the Japanese House of Representatives in 2019.
However, under the modifications to the PSA, all references to “virtual currency” must be replaced with the term “crypto asset.”
Starting on May 1, all exchanges and regulatory bodies in Japan must refer to “virtual currency” as a “crypto asset” https://t.co/yvoyi4riif — Cointelegraph (@Cointelegraph) May 19, 2020
As per the report, the Japan Virtual Currency Exchange Agency (JVCEA), the country’s self-regulatory group, has changed its name to the Japan Crypto Asset Exchange Agency, as it will still be referred to as the JVCEA.
Kuwabara said that Bitbank will modify its website and all publications to reflect these changes.
It has been analyzed that from May 1, crypto exchanges operating in Japan have to manage their users’ money separately from their own cash flows, which means finding a third-party operator to keep hold of the users’ money in a trust bank or separate bank account held by the exchange.
The Japanese Cabinet Ordinance updated these restrictions in April by requiring that users’ money be entrusted. In response to such impending regulations, crypto exchange BitMEX closed its Japan services on April 28.
Likewise, according to the PSA guidelines, exchanges now have to use “reliable methods” to manage users’ money, as the regulations cite cold wallets, but mention that hot wallets can be used as long as they hold “the same kind and the same quantities of crypto-assets” as the users’ crypto assets.
This would allow any exchange to compensate users if the funds are stolen.
Other methods of compensation proposed by the PSA may have been in response to the infamous hack of Japanese exchange Mt. Gox, which still has some crypto holders waiting for their money.
However, under the new PSA, Japanese Cabinet Ordinance and financial watchdog Financial Services Agency (FSA) guidelines, any user who sends crypto assets to exchange have a “prioritized right of return” for any assets.
Thus, if an exchange were to go bankrupt, as was the case with Mt. Gox, the user will be able to receive compensation in preference to other creditors.
Source: Cointelegraph | Image: Pixabay