“FinTech”, a word originally created by combining “Finance” and “Technology”, was once an esoteric
buzzword, but it is now so commonly used (in the media, published reports from the Japanese Financial Services Agency (the
“JFSA”) and other organizations) that it is firmly entrenched in our vocabulary. In Japan, as compared to other jurisdictions
in the financial regulatory landscape, this is particularly true as Japan may be one of the most advanced FinTech
Japan has actively introduced / developed legislation to manage developments in FinTech. Furthermore, as a part
of the regulators’ initiatives, on April 27, 2016, the JFSA announced the establishment of a “Panel of Experts on FinTech
Start-ups.” According to the JFSA, the purpose of this Panel was to create a framework allowing experts to discuss possible
measures to create a “FinTech ecosystem.” (For further details, see the link below.)
The FinTech-related legislation recently introduced in Japan includes the following:
The Payment Services Act (the “PSA) was amended to introduce registration requirements for “Virtual Currency
Exchange Service Providers”. For purposes of the PSA, Virtual Currency Exchange Services has been defined to include any of
the following acts carried out as a business: (i) the sale/purchase of Virtual Currency or exchanges for other Virtual Currency;
(ii) intermediary, agency or delegation services for the acts listed in (i) above; or (iii) the management of users’ money or
Virtual Currency in connection with the acts listed in (i) and (ii). As a consequence of this definition, not only typical
cryptocurrency (virtual currency) “exchanges”, but also, so-called OTC brokers are regulated as Virtual Currency Exchange
Service Providers under the PSA. Moreover, operators of a platform for initial coin offerings (ICOs) or consultants may be
considered Virtual Currency Exchange Service Providers depending on their business structure. Since this amendment to the PSA
became effective on April 1, 2017, 16 “exchanges” have been registered (per the list published by the
JFSA dated April 20, 2018).
In March 2017, a bill to amend the Financial Instruments and Exchange Act (the “FIEA”) was enacted in the
Diet. The amendments to the FIEA introduced, among other things, certain regulations concerning “High Frequency Trading”.
The key feature of those regulations is the newly introduced registration system for “High Frequency Traders”. The related
subordinate regulations have already been published, and the entire HFT legislation has become effective on April 1, 2018.
In March 2017, a bill amending the Banking Act was enacted in the Diet to regulate “Electronic Payment
Intermediate Service Providers” and facilitate open API (Application Programming Interface). The amendments require entities
to register with the JFSA in order to provide Electronic Payment Intermediate Services. Electronic Payment Intermediate Service
Providers may be defined broadly enough to include intermediaries between financial institutions and customers, such as entities
using IT to communicate payment instructions to banks based on the entrustment from customers or entities using IT to provide
customers with information about their financial accounts held by banks. The amendment is scheduled to come into force on June 1 this year. The FSA published a set of draft subordinate regulations on March 9 for public comments (which will was closed on April 9).
Anderson Mori & Tomotsune has one of the leading FinTech practices in Japan. With extensive experience across
all areas of FinTech, our skilled lawyers provide innovative, up-to-date legal advice to our clients in this fast-growing and
cutting-edge industry. Because of our long history of success and proven understanding of new technology, our advice is
regularly sought in Fintech-related matters, including applications for licenses and regulatory approvals for the business
start-ups, analysis of financial regulatory issues, development and marketing of innovative financial instruments, products and
transactions, consultations and negotiations with official regulatory authorities and self-regulatory organizations.