![]() ![]() (b) If an active market does not exist for the cryptocurrency, such cryptocurrency should be valued at its cost. ![]() (a) If an active market exists for the cryptocurrency, such cryptocurrency should be valued using the market price at the balance sheet date, and any difference between the market value and the book value should be recognised as a gain or loss. It must also submit to auditing by an accounting firm or certified public accountant, and be responsible for verifying the identity of users, thus enhancing the anti-money laundering (AML) regime under the Act on Prevention of Transfer of Criminal Proceeds.Īccording to the Tentative Practical Solution on the Accounting for Virtual Currencies published by the ASBJ on March 14 2018, the calculation of the value of cryptocurrencies at the balance sheet date for cryptocurrencies held by an entity on its own behalf (that is, excluding those held by a cryptocurrency dealer on behalf of its customers) can be done as follows: ![]() (c) management of users' money or cryptocurrency in connection with the acts in (a) or (b).Ī cryptocurrency exchange must establish systems and procedures to enable it to comply with user protection rules, particularly the segregated management of cryptocurrency and money deposited by its users. (b) intermediary, agency or delegation services in relation to the acts in (a) or (a) the sale, purchase or exchange of cryptocurrencies Under the said PSA regime, cryptocurrency exchange service means: The term currency-denominated assets means assets which are denominated in Japanese currency or in a foreign currency, or for which performance of obligations, refunds, or anything equivalent has to be made in Japanese currency or in a foreign currency. (b) property value which can be mutually exchanged with what is set forth in the preceding item with unspecified persons acting as counterparties, and which can be transferred by means of an electronic data processing system. (a) property value which can be used in relation to unspecified persons for the purpose of paying consideration for the purchase or leasing of goods or the receipt the of provision of services, can also be purchased from and sold to unspecified persons acting as counterparties, and which can be transferred by means of an electronic data processing system and The term cryptocurrency under the PSA means any of the following (excluding currency-denominated assets): Under the PSA, a cryptocurrency exchange must register with the Prime Minister (in effect the relevant finance bureau). Regulatory regime for cryptocurrency exchanges The regulator put together a new study group in March 2018 to consider a number of issues around cryptocurrency exchange businesses, including possible regulations on margin trading and ICOs. Inspections conducted by the Financial Services Agency (JFSA) into each cryptocurrency exchange after the recent massive Coincheck theft revealed compliance and security problems at many of them. Since then, the Accounting Standards Board of Japan (ASBJ) has published tentative accounting standards for cryptocurrencies and the National Tax Authority (NTA) has published a method for calculating income from cryptocurrency transactions for the purpose of individual users' tax returns.īut even though the regulation of cryptocurrencies is quite advanced, the regulation of initial coin offerings (ICOs) has yet to be addressed. The new regulatory regime for cryptocurrencies under the amended PSA came into force on April 1 2017. Japan was the first country to introduce licensing for cryptocurrency exchanges, by amending the Payment Services Act (PSA) in 2016. ![]() Based on the Japanese yen flow into bitcoin, it's believed that approximately 60% of the trading volume of bitcoin is done by Japanese investors. ![]()
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