1. Summary
On December 21, 2018, the Financial Services Agency of Japan
(the "FSA") released the final report of the "Study
Group on the Virtual Currency Exchange Services," which
proposed major reforms to the regulatory framework for virtual
currencies and security tokens, and such reforms are expected to be
realized through legislative measures led by the FSA.
2. Background
In May 2016, Japan passed a law introducing new regulations on
"virtual currency exchange service providers"
("VCESPs"), such as crypto exchange operators, under the
Payment Services Act (the "PSA"), for the purpose of user
protection (including a registration requirement), and under the
Act on Prevention of Transfer of Criminal Proceeds (the
"APTCP"), for the purpose of AML/CFT (anti-money
laundering and countering the financing of terrorism), which came
into force in April 2017. Subsequently, there were incidents of
virtual currency theft from VCESPs, and many VCESPs were found to
have
