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Everything about Japan Passing Bill to Regulate Bitcoin and Cryptocurrency Exchanges. (Bitcoin Exchange Laws and Regulations)


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May 25, 2016, the cryptocurrency bill was passed at the plenary session of the House of Councilors.
This Law shall enter into force within a year after its official publication.

As Coincheck, we summarized the laws and regulations for cryptocurrency and Bitcoin and how the Cryptocurrency market in Japan will change in coming years!


Index
1. Purpose of Cryptocurrency Bill
2. New and existing cryptocurrency exchanges must go through registration processes.
3. Periodic accounting audit, supervision, and business improvements.
4. Cancellation of registration and dispute settlement.
5. The obligation to join Certified Association for Payment Service Providers.
6. How Coincheck deal with new regulation.


1. Purpose of Cryptocurrency Bill
Under the new cryptocurrency law, every cryptocurrency exchanges must go through registration processes. Due to this new law, Financial Services Agency can act as competent authorities delegating rights to order business improvements or termination of cryptocurrency exchange.
By implementing such regulations, it will remedy Anti-Money Laundering/Counter-Terrorist Financing (AML/CFT) deficiencies.
This law will protect customers and help everyone to use cryptocurrency safely just like fiat currency.

2. New and existing cryptocurrency exchanges must go through registration processes.

To operate a cryptocurrency related business, every cryptocurrency exchanges like Coincheck must submit registration documentation to Cabinet Office with the following information.

- Trade name and address
- Amount of Capital Fund
- The name of cryptocurrency exchange and the current address where business takes place.
- The name of board members and auditors.
- For a company with accounting advisors, the name of accounting advisors.
- For foreign cryptocurrency exchange, the name of representative living in Japan.
- The name of cryptocurrencies the company is planning to provide.
- The description of cryptocurrency exchanges business.
- If the company planning to delegate part of a cryptocurrency exchange business operation, the company must provide the name and the address of delegatee.
- If the company is operating a different business, the type of that business.
- Any other information that Cabinet Office requires to provide.

Also, submission of financial documents and documents that show legitimacy business operation are required, so only legitimate business can register as an exchange.

Once all of these documents are verified, the company will be listed on the list of registered cryptocurrency exchanges.

List of registered cryptocurrency exchanges will be presented to the public, so everyone can see the list freely and use officially registered exchanges!

3. Periodic accounting audit, supervision, and business improvements.

A periodic audit by an audit corporation or an accountant is mandatory to ensure users safety (e.g. management of assets, provision of information).

Also, submission of accounting books to Cabinet Office is mandatory every year. The audit report is also required, so it’s impossible to doctor accounting books.

Cabinet Office has right to order exchanges to improve their business operation if Cabinet Office thinks it is necessary based on their operations and financial situation.

Because of Mt. Gox bankruptcy credibility of cryptocurrency exchanges is questionable.

However, by implementing cryptocurrency laws, it will be acknowledged by the majority of public, increasing the reliability of cryptocurrency overall.

4. Cancellation of registration and dispute settlement.

Even if cryptocurrency exchange is listed on the registered exchange list, if exchange violates laws their registration may be canceled.

When such event happens, an exchange must complete execution of an obligation and return managed assets to customers.

Since there was no law until now, there was an exchange that bankrupt and left a huge amount of debt.
The majority of exchanges takes appropriate actions when there is a problem between exchanges and customers. However, there were no clear rules until now.

By implementing new laws even when the risk associated with cryptocurrency will be reduced dramatically.

5. The obligation to join Certified Association for Payment Service Providers.

Certified Association for Payment Service Providers is a general incorporated association.

Before, only limited merchants were able to join Certified Association for Payment Service Providers. Cryptocurrency bill enables cryptocurrency exchanges to also join the association.

Due to this change, cryptocurrency exchanges can also receive advice regarding laws and regulations.

6. How Coincheck deal with new regulation.

How Coincheck is dealing with new regulation?

We will briefly explain what cryptocurrency exchanges must prepare and about the general incorporated association that we are already a member.

- Financial requirement
Exact requirements still haven’t set, but there will be minimum capitalization requirement and other financial requirements.
As Coincheck, we are preparing for coming changes.

- Obligation of auditing by an accountant or accounting firm
As a leading cryptocurrency exchange, we will cooperate with an accountant or accounting firm to retain our financing standing transparent. Coincheck will continue to be a safe place to trade cryptocurrencies.

- Register as official cryptocurrency exchange
Since 2014, Coincheck is a member of self-censorship organization. We operate the exchange thorough implementation of self-regulation. When law enters into force Coincheck will strictly follow the laws.

- A member of JBA (Japan Blockchain Association)
Coincheck joined JBA on April 27, 2016.
As a member of JBA, we will reinforce bitcoin and blockchain technology in Japan.

We hope this post deepens understanding of bitcoin and cryptocurrency regulations and laws in Japan.

As Coincheck, we will continue to provide the best possible service for everyone. Thank you very much for your support!



Coincheck Cryptocurrency Exchange
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Coincheck Cryptocurrency Exchange