Digital Assets Ecosystem: Legal Evolution and Future Outlook

Transcript

Thank you for waiting. We'll now move on to the conference presentations. Now, please welcome our next presenter, Mr. Takahumi Oi. Mr. Oi, the floor is yours. [Music] Hi ladies and gentlemen and it's honor to be invited here. Uh my name is Takahumi Oi. I'm from Fintech Association of Japan and also working at LO farm and also uh advisor to uh OSAK local government. And uh so today's

agenda it's the uh so very uh so or landscape of the current uh or regulatory development and uh so as a development related to uh crypto assets and stable coin in Japan and uh uh so at first would like to introduce so some uh recent so changing point discussion points about uh legal framework framework and tax framework uh of uh crypto assets and next uh uh so stable coin uh regal framework and also some example of uh so stable coin in Japan and uh so security token uh offering uh

so this is also related to uh so blockchain ecosystem and uh so referring some uh recent discussion about uh central bank uh digital currency and crossber uh torens. So uh at first uh would like to mention about wiger and uh tax evolution of crypto asset in Japan. So there are some uh so regulatory development in other countries especially in US. Uh so US is very uh so aggressive uh uh position to uh implement crypto and uh uh uh stable

coin and also uh European country uh European Union is implementing the uh mika for crypto assets and stable coin. So corresponding to these uh activities in uh so foreign uh countries uh so Japan is uh making uh so or important regulatory change uh uh for crypto assets. So we are uh moving uh crypto asset uh toward uh uh so type of security category. So this means the uh so very important or effect about the uh so changing tax rate or from 60% or to

or 20% or maybe so uh so this is a very important or so combination of uh uh not only legal system but also tax system is very important for crypto eosystem. systems and also so setting up uh so such uh security category is uh very useful to implement such uh crypto into very uh not so crypto world or so very uh real world. Uh so this is uh very important uh step for uh Japanese uh uh uh crypto and uh so or Japan is reading

uh so crypto regulatory uh from 2016. So this was uh so first regulation for crypto asset exchange in 2016 and after the some so mash attacks uh against uh uh so crypto set exchange uh so Japan uh changed uh so crypto set regulations uh uh so shibier more shibier uh so uh this was uh useful to protect uh for type of the not attacking uh but also type of the so bankruptcy procedure in US such as uh so FDX bankruptcy case uh so Japanese customer was protected by

Japanese regulation uh in uh after 2020 division and uh uh so 2023 uh we changed uh uh so or payment services act or in order to or make new category for or stable coin. This is one of the most fastest uh uh regulation uh related to uh stable coin and uh so last year uh so or or payment services act also changed uh and uh so or or started to or or change uh for new stable coin regime and also so some uh

uh regulatory development or related to crypto set and uh uh so this year and the next year uh so we will change crypto asset from payment service to financial instrument and uh so one of the new or or intermediary framework it's uh introduced in uh so or 2024 discussions and this year's uh revision of payment services act and uh So uh there includes uh uh so type of intermediary category uh for crypto trading. So this is very important for type of the so retail

company and mobile uh uh carriers and other so very big Japanese companies have interested in uh so this type of the new intermediary service. This service uh can uh be uh applied to or intermediary service for crypto assets and also stable coin and uh this is very important or or regulatory framework in order to make uh some programmability uh and uh type of the uh embedded or or so crypto asset or service.

And uh next is the uh so Japanese stable coin uh framework. So or we set up uh uh stable coin negligation uh 2023 and also or this is not limited to only banks or we can uh uh use uh so payment service provider license and also so type of trust or framework. So there are three choices for uh several coin and uh also uh so last year's discussion and also this year's division uh so Japanese regulation will uh adomit type of the so

capital efficiency for stable coin so up to or 50% of deserve uh can be uh uh so used or or or for investment into so very low risk assets. So this is a very important foundation for uh or stable coin and uh so of course uh so Japanese regulation is so or very considering about consumer protection. So or we have very strong foundation uh of the so or protection of uh asset reserve and also so or or consumers and uh so our

approach it's the so very unique so very uh so regious uh uh so protection uh for safeguards and also type of the uh requirement uh for stable coin issuers and uh also type of the so intermediary service. Uh and uh however uh so we are shaking uh also innovation or so or we admit other types than banks. Yeah. trust and payment service and also or so type of the uh so or or 50% of reserve can be

used or for lowrisk uh asset or or asset management and uh so this is the so example of the uh so Japanese uh uh several coin. Uh so the first case was the uh circle uh uh so introduced by uh uh SBI. Uh so this is uh uh so not uh Japanese stable coin. So foreign uh country issued stable coin uh uh was approved by FA and also JPY uh uh was approved to issue stable coin. Uh so uh

this is the uh so or stable coin issued by uh startup company. Uh this may be very difficult or for us legim. So or this is uh one of the so or important or or our uh uh so achievement or by making uh so or or good or stable coin regulations and uh so also JPY sheets uh so stable coin uh it's uh integrated into Osaka wallet. So, Osakiso is one of the biggest or commercial event in Japan uh

this year. Uh so, or such stable coin activity is also connected to so or or Japanese uh uh business chain and so security token offering is also ongoing uh expanding. So or so we set up uh regulatory uh regime uh in 2020 and also or real estate or asset is very good uh target for security token offering in Japan and also some cases about uh corporate bonds and uh so next step uh will be the uh

type of the uh so uh deposit or token tokenize. So or there will be uh many uh uh so possibility uh for expanding security token offering. Uh so actually uh Osaka has the uh so or or digital uh exchange in in uh so this area uh so this is uh one of the most important feature for Osaka's uh international financial city uh about making new market in uh this area

and uh so next movement movement is the so very dual movement or in digital asset. So there are some uh so movement from crypto to financial instrument. So this year's uh Japanese uh uh regulatory reform is one example of from crypto to financial instrument and also so type of the uh so crypto exchange is going to or be listed in stock exchange.

These are also type of the uh examples and also uh so some such intermediary service is also example for or crypto to or or financial instrument and or financial products uh uh uh should be uh uh example of the uh so blockchain uh application and so type of the so creation of uh digital asset market in Osa. Saka it's uh one of the most important topic for Osak uh so international financial cities project and also real estate or corporate band and uh so deposit or token uh will be uh

so continued and uh so this is the type of the uh so so strategic approach to digital currency we need to consider type of geopolitical ICS and so payment changing uh payment infrastructures. Uh so there are some uh changing uh of the uh so digital uh landscape uh and so central bank are uh so considering uh type of central bank digital currency uh so considering type of the very strategic intent and also geopolitical uh uh so concerns and stable coin is

also rapidly so emerging And uh so may forms the uh type of the so important infrastructure for payment network and also so very uh important uh topic about the so digital ecosystem it's uh how to so preserve uh sovereign for each country and each area. So or such uh central bank uh digital currency is the uh one of the example or for or such uh so sovereign related uh discussions and also no not only such so very uh type of

the uh so so deep uh discussion but also so so or or so daytoday uh transactions are so very uh digitalized and uh so very frequently uh uh used uh and uh so so ML compliance and also uh so very so long-term uh so financial uh type of the uh so or or sustainability uh should be uh considered or with uh blockchain and so international uh network and this is the so Japanese uh CBDC

framework. So there to to uh structures uh about uh CBDC. So central banks will uh central bank bank of Japan will issue uh uh so or digital currency and or so type of the banks and or payment service provider will be uh so intermediary of the so such uh uh central bank digital currency and also there are some uh so safeguards uh for type of the so very sudden market or change and also considering privacy uh and uh compliance

and interoperability is very uh essential uh point uh for implement CBDC and this is uh also all global uh trends uh of uh collaboration. So there are so very important uh uh concerns about MLCFT and also geopolitics and type of the uh so or regional sovereign and or privacy protections and also Japanese initiatives are uh so related to these concerns uh such as the travel rules was implemented by uh so or or Japanese uh uh so regulators uh initiatives and also

so we are uh uh discussing uh with many countries especially G7 countries and OECD uh discussing about data free flow with trust or data free flow is uh very essential for uh so international uh transaction and uh so we set up uh or we are setting up also financial hub uh not Tokyo or Sofukuoka and Osaka. So Osaka has the so good or tax incentive systems for or startup companies especially foreign startup company and also making new market

such as uh digital exchange and so we are uh uh in the uh process of uh making digital asset ecosystems. So blockchain uh maturation it's so undergoing and also so payment innovation is also very so essential parts of the uh so digital asset or ecosystems and uh so we are uh so Japan is also contributing to the such uh digital ecosystems. So or we set up the so or type of the so crypto friendly but also considering uh

consumer protection and consumer other concerns uh uh with the so very frequent or regulatory change and also we are setting up uh tax system uh for crypto. So or we are very uh so making uh clear uh regulatory framework and good environment for so crypto uh uh ecosystems and also so or our future direction it's the uh so to make combination of the so so crypto or sector and uh so very dear uh for so financial uh uh so or institution and so

such environment uh this is uh one of the most uh so biggest challenge for crypto ecosystem uh so to be implemented in Japan so or I think uh so today conference is uh one of the uh the most important uh conference uh for such uh making new or crypto ecosystem so uh I Hope uh so you have uh so very good time uh in this uh conference and make uh friends or uh so or business partner or something uh so or in this uh uh uh so very uh uh so or good conference uh for

so crypto ecosystem. Thank you so much.