The Legal 500 & The In-House Lawyer
Comparative Legal Guide
Japan: Fintech
This country-speciﬁc Q&A provides an overview toFintech law in Japan.

Country Author: Anderson Mori &Tomostune
The Legal 500

It will cover open banking, regulation ofdata, cryptocurrencies, blockchain, AI and insurtech.
This Q&A is part of the global guide to Fintech. For afull list of jurisdictional Q&As
visit http://www.inhouselawyer.co.uk/index.php/
practice-areas/ﬁntech/

Ken Kawai,Partner
ken.kawai@amt-law.com

Akihito Miyake,Partnerakihito.miyake@amt-law.com

Kei Sasaki,Partnerkei.sasaki@amt-law.com

Takeshi Nagase,
Senior Associatetakeshi.nagase@amt-law.com

1. What are the sources of payments law in your jurisdiction?

There are many payment methods and instruments in Japan, but no comprehensive
payment law. The General payment rule applicable to rights and obligations isgoverned by the Civil Code (Act No. 89 of 1896). The rules for the issuance and controlof cash are subject to the Act on Unit of Currency and Issuance of Cash (Act No. 42 of
1987). In addition to these general rules, certain payment methods/instruments are
regulated as follows:

1.1. Prepaid Payment Instrument ("PPI")A PPI is an instrument that records a certain value charged in advance of use and isthen debited as payment of consideration for goods and/or services. PPIs are regulated
under the Payment Services Act (Act No. 59 of 2009).

1.2 Installed Payment
Installed Payments, in connection with the payment of consideration for goods orservices to be divided over 2 months or more, are regulated under the Instalment Sales
Act (Act No. 159 of 1961). The Act substantially covers all credit card payments.

1.3 RemittanceTraditionally, remittance was regulated by the Banking Act (Act No. 59 of 1981) andother speciﬁc laws applicable to ﬁnancial institutions. Only banks and such ﬁnancial
institutions were allowed to conduct remittance businesses. However, since theintroduction of the Payment Services Act in 2009, certain registered companies, otherthan banks or ﬁnancial institutions, are permitted to handle the remittance of up to JPY
1 million.

1.4 Others
There are some other traditional payment methods, each subject to speciﬁc legislation.
For example, promissory notes are subject to the Negotiable Instrument Act (Act No.20
of 1932) and checks are subject to the Check Act (Act No. 57 of 1933), though theissuers of such payment methods are not required to be licensed or registered; theEelectronically Recorded Monetary Claims Act (Act No. 102 of 2007) provides a legal
framework for the electronic recording of monetary claims.

2. Can payment services be provided by non-banks, and if so on

what conditions?
Non-banks can provide payment services up to JPY 1million.

As for PPIs, the issuer must register its PPI business and the characteristics of the PPI at
the competent Local Finance Bureau. The application for registration will be rejected if
any of the disqualiﬁcation conditions provided under the Payment Services Act exists,such as the net assets of the issuer being less than JPY 100 million, the issuer fails tomaintain compliance systems and fails to monitor and control the stores where such
PPIs are to be used.

Credit providers for installed payments are required to ﬁle for registration with thehead of the competent local bureau of the Ministry of Economy, Trade and Industry("METI"). Disqualiﬁcation conditions, such as insuﬃcient net assets (e.g. anintermediary of comprehensive credit purchase must maintain net assets equal to 90%
or more of its capital amount) depend on the types of goods and/or services therelevant instalment payment is made for. Similar to the PPI regulation, there are also
certain compliance requirements.

3. What are the most popular payment methods and payment

instruments in your jurisdiction?
The most popular payment method is deﬁnitely cash. According to "Cashless Vision", acashless payment related report issued by METI in April 2018, the rate of cashless
settlements in Japan is 18.4% (which is very low compared to South Korea (89.1%) or
the United States (45.0%)). Other than cash, the most popular payment methods are
credit cards and prepaid instruments.

4. What is the status of open banking in your jurisdiction (i.e.

access to banks’ transaction data and push-payment
functionality by third party service providers)? Is it mandated bylaw, if so to which entities, and what is state of implementationin practice?
In March 2017, the Diet enacted a bill amending the Banking Act to regulate“Electronic Payment Intermediate Service Providers” and facilitate open API(Application Programming Interface). The amendments, including relevant subordinate
regulations, have come into eﬀect on June 1, 2018. The amendments require entities
that provide Electronic Payment Intermediate Services to register with the Japan
Financial Services Agency (the “JFSA”). Electronic Payment Intermediate Service
Providers are deﬁned broadly enough to include intermediaries between ﬁnancial
institutions and customers, such as entities using IT to communicate payment
instructions to banks based on entrustments from customers or entities using IT toprovide customers with information about their accounts that are held in banks. Under
the amendments, ﬁnancial institutions must adopt and make public the standards for
decisions to enter into contracts with speciﬁc Electronic Payment Intermediate Service
Providers. Financial Institutions must treat Electronic Payment Intermediate Service
Providers that meet such standards in a fair and non-discriminatory manner. Financial
institutions intending to enter into contracts with Electronic Payment Intermediate
Service Providers are required to make eﬀorts to develop an open API system within
two years following the date.

5. How does the regulation of data in your jurisdiction impact on

the provision of ﬁnancial services to consumers and businesses?
The Act on the Protection of Personal Information (the “APPI”) is a principle-based
regime for the processing and protection of personal data in Japan. The APPI generally
follows the eight basic principles of the OECD Guidelines on the Protection of Privacy
and Transborder Flow of Personal Data. The Act is applicable to all private businesses,
including Fintech. Based on the requirements of the APPI, each governmental ministry
issued administrative guidelines applicable to the speciﬁc industry sectors under its
supervision. Fintech businesses must comply with the “Guidelines on Personal

Information Protection" that are relevant to the ﬁnancial services industry.

6. What are regulators in your jurisdiction doing to encourage

innovation in the ﬁnancial sector? Are there any initiatives suchas sandboxes, or special regulatory conditions for ﬁntechs?
In order to encourage Fintech innovation, the JFSA introduced the “Fintech TestingHub” in September, 2017. The JFSA sets up, on a case-by-case basis, a support teamthat helps Fintech companies and ﬁnancial institutions identify and solve potential legal
issues and risks associated with new Fintech schemes.

In June, 2018, the headquarters of Japan’s Economic Revitalization of the Cabinet
Secretariat opened a cross-governmental one-stop desk for the Regulatory Sandbox
Scheme in Japan. The resource, available to Japanese as well as foreign companies,
enables applicants (once approved) to carry out, under certain conditions, ademonstration of their projects even if such activities are not yet covered undercurrent laws and regulations and without requiring a legal amendment. Blockchain
technology, together with AI, IoT and big data, are explicitly mentioned in the basic
policy as prospective and suitable areas.

7. Do you foresee any imminent risks to the growth of the ﬁntech

market in your jurisdiction?
Japan was the ﬁrst country to establish a regulatory framework for virtual currencies.
The cryptocurrency market in Japan experienced exponential growth in 2017 on the
coattails of a steep rise in the price of bitcoin and growing enthusiasm for initial coinoﬀerings ("ICOs"). Japan has emerged as one of the largest cryptocurrency markets
globally, and the Japanese government signalled its intention to support and encouragecontinued and sustainable growth of the cryptocurrency market.

However, the upsurge of the Japanese cryptocurrency market was arrested in January
2018 when one of the largest cryptocurrency exchanges in Japan, announced losses ofapproximately USD 530 million due to a cyber-attack on its network. After that hacking
incident, the JFSA conducted inspections of all deemed crypto-exchanges (i.e. thecrypto-exchanges which are allowed to provided services to its clients without having
the applicable registration during the grace period) and seven registered cryptoexchanges. The JFSA found that most of these entities are weak especially in the areasof AML/CFT and cyber security and issued business improvement orders ("BIO") or
business suspension orders to all these exchanges. Based on the ﬁndings in theinspection, the JFSA raised the bar for obtaining the registration as a Virtual Currency
Exchange Service Provider is much higher than before. In addition, in order to enhance
consumer protections, the JFSA established “the Study Group on Virtual Currency
Exchange Services etc.” (the “Study Group”) that analyses and considers theappropriate legal framework for cryptocurrency-based businesses.

The incident also accelerated integration of the exchange industry. The Japan Virtual
Currency Exchange Association (the "JVCEA"), a newly founded self-regulatoryorganization whose membership consists of 16 registered exchanges, was establishedon March 29, 2018. The JVCEA is FSA-accredited and proposes regulations with which
its members must comply.

In summary, the weakness in AML/CFT and cyber security of the cryptocurrency
exchange may hinder the development in cryptocurrency and blockchain industry.

8. What tax incentives exist in your jurisdiction to encourage

ﬁntech investment?
Currently no speciﬁc tax incentives accelerating ﬁntech investment are granted inJapan. However, an individual angel investor can enjoy special treatment if he/she
invests into new shares of a company that exists for less than 3 years and if certain
requirements in relation to its size, cash ﬂow deﬁcit and amount of research anddevelopment ("R&D") expenses are satisﬁed. Further, some tax credit is available for
R&D expenses, provided the company satisﬁes certain requirements determined basedon its size.

9. Which areas of ﬁntech are attracting investment in yourjurisdiction, and at what level (Series A, Series B etc)?
It depends on the relevant projects/companies and no typical pattern exists. Generally
speaking, it is rare for foreign investors to make early stage investments in Fintech
companies in Japan since domestic investors have a strong interest the industry. Due
to ease of communication and language facility, Japanese Fintech companies tend to
rely on domestic over foreign investors at such stage.

10. If a ﬁntech entrepreneur was looking for a jurisdiction in which

to begin operations, why would it choose yours?
The Tokyo Metropolitan Government (the "TMG") released a paper titled "Global
Financial City: Tokyo" Vision - Toward the Tokyo Financial Big Bang in 2017. While itoutlines various measures to nurture domestic players and attract foreign players in
the entire ﬁnancial sector, the TMG gives particular importance to asset management
and ﬁntech businesses and sets its aim to attract 40 foreign asset managers andﬁntech companies toward the ﬁscal year 2020.

As a part of such measures, the TMG has been holding an annual "Accelerator Program- FinTech Business Camp Tokyo" since 2017. The TMG holds such program with thegoal of inviting foreign startups with cutting-edge technologies and business models tocome to Tokyo and deepen their knowledge of Japan's unique market and the various
needs of local companies. Further, by providing local companies the opportunity tofamiliarize themselves with technologies possessed by foreign entrepreneurs, suchprogram aims to cultivate business matching and attract foreign entrepreneurs toTokyo.

In addition, the TMG opened the "Business Development Center Tokyo" which oﬀers
foreign entrepreneurs who are considering an expansion of their businesses in Tokyo atotal support package covering all aspects from business through to lifestyle issues. For
foreign companies planning expansion into the Special Zone for Asian Headquarters inparticular, this center provides both business exchange support and specializedconsulting services. Furthermore, the "Tokyo One-Stop Business Establishment Center"
facilitates the incorporation of its ancillary procedures, such as taxes, social security
and immigration, for foreign entrepreneurs considering establishing businesses inTokyo.

Also at the national government level, the JFSA launched the "FinTech Support Desk" in2015. This is a one-stop contact point for inquiries and exchange of information on
ﬁntech. It accepts a wide-range of inquiries on various matters in ﬁnance, from those
who currently operate ﬁntech businesses to others who intend to start ﬁntech startups.

11. Access to talent is often cited as a key issue for ﬁntechs – arethere any immigration rules in your jurisdiction which would
help or hinder that access, whether in force now or imminently?
For instance, are quotas systems/immigration caps in place inyour jurisdiction and how are they determined?
The TMG recently initiated a program to increase the number of foreign entrepreneurs.
Before this initiative, a foreigner wishing to start up a business in Japan had to obtain a"business manager" visa. In order to receive such residency status, the applicant had
to open an oﬃce in Japan as well as employ at least two full-time staﬀ members, orinvest at least JPY5 million in Japan - a high hurdle to surmount.

Pursuant to the TMG program, an applicant can receive a residency status as abusiness manager for half a year even if the conditions mentioned above are not met,
provided that his/her business plans and other necessary information are ﬁled with theTMG, and the TMG then conﬁrms that such applicant is likely to fulﬁll the conditions
within the following six month period.

The Business Development Center Tokyo provides individual support under the
program so that foreign entrepreneurs are able to fulﬁll the visa conditions by the endof the six months and renew their residency status.

12. If there are gaps in access to talent, are regulators looking to ﬁllthese and if so how? How much impact does the ﬁntech industry
have on inﬂuencing immigration policy in your jurisdiction?
In order to promote entry of highly-skilled foreign professionals into Japan, theImmigration Bureau of Japan introduced the "Points-based System for Highly-Skilled
Foreign Professionals" in 2012. Pursuant to this system, a highly-skilled foreign
professional can earn points depending on his/her academic background, work
experience, annual income, age and other factors and, if such points reach theprescribed threshold, may be entitled to preferential treatment, including (i) permission
for multiple activities during his/her stay in Japan, (ii) a ﬁve-year stay, (iii) relaxation ofrequirements for permanent residence permit, (iv) permission for his/her spouse towork in Japan and, (v) subject to certain conditions, permission for bringing his/herparents and domestic worker to Japan. It is expected that a bonus of 10 points will be
granted to highly-skilled foreign professionals who work in a ﬁntech company
designated by the TMG.

13. What protections can a ﬁntech use in your jurisdiction to protect

its intellectual property?
There are no speciﬁc Intellectual property regulatory provisions applicable solely toﬁntech businesses. Such businesses are protected under the Patent Act, the Trademark
Act, the Copyright Act, the Design Act and the Unfair Competition Prevention Act.

14. How are cryptocurrencies treated under the regulatory

framework in your jurisdiction?
14.1 Deﬁnition of Virtual Currency

The Payment Services Act ("PSA") deﬁnes "Virtual Currency" and requires a person who
provides Virtual Currency Exchange Services to be registered with the JFSA.

The term "Virtual Currency" is deﬁned in the PSA as:(i) proprietary value that may be used to pay an unspeciﬁed person the price of any
goods purchased or borrowed or any services provided and may be sold to orpurchased from an unspeciﬁed person (limited to that recorded on electronic devices
or other objects by electronic means and excluding Japanese and other foreign
currencies and Currency Denominated Assets; the same applies in the following item)
and that may be transferred using an electronic data processing system; or(ii) proprietary value that may be exchanged reciprocally for proprietary value
speciﬁed in the preceding item with an unspeciﬁed person and that may be transferredusing an electronic data processing system.

"Currency Denominated Assets" means any assets that are denominated in Japaneseor other foreign currency. Such assets do not fall within the Virtual Currency deﬁnition.
For example, prepaid e-money cards usually fall under Currency Denominated Assets.
If a coin issued by a bank is guaranteed to have a certain value of ﬁat currency, such a
coin is unlikely to be treated as Virtual Currency but rather as Currency Denominated
Assets (for detail. please see No.22 below).

14.2 Deﬁnition of Virtual Currency Exchange Services

The term “Virtual Currency Exchange Services” means any of the following acts carriedout as a business:(i) sale and purchase of Virtual Currency or exchange of Virtual Currency for other
Virtual Currency;(ii) intermediary, brokerage or delegation for the acts listed in (i) above; or(iii) management of users’ money or Virtual Currency in connection with the acts listedin (i) or (ii) above.

A person so registered with the JFSA is called a Virtual Currency Exchange Service
Provider. Only Virtual Currency Exchange Service Providers may engage in Virtual
Currency Exchange Services. A Foreign Virtual Currency Exchange Service Provider
who did not register with the JFSA is prohibited from soliciting items (i) through (iii)above to persons in Japan. Advertisements in the website of Foreign Virtual Currency
Exchange Service Provider fall under the deﬁnition of solicitation, except where
reasonable measures (such as prevention of access from Japan by blocking theJapanese IP address and disclaimer language cautioning that residents of Japan cannot
participate in the transaction) have been taken so that the advertisements will not leadto transactions related to Virtual Currency Exchange with persons in Japan.

The applicant must be (i) a stock company (kabushiki-kaisha), or (ii) a Foreign Virtual
Currency Exchange Service Provider which has an oﬃce and representative(s) in Japan.
Accordingly, any foreign entity wishing to register as a Virtual Currency Exchange
Service Provider with the JFSA must establish either a subsidiary (in the form ofkabushiki-kaisha) or a branch in Japan.

In addition, the applicant must have (a) suﬃcient ﬁnancial basis (minimum capitalamount of JPY10 million and a positive net assets amount), (b) a satisfactoryorganizational structure and certain systems to conduct the Virtual Currency Exchange
Service appropriately and properly, and (c) certain systems to ensure compliance with
relevant laws and regulations.

15. How are initial coin oﬀerings treated in your jurisdiction? Do you

foresee any change in this over the next 12-24 months?
Tokens issued by way of ICOs take many forms, and the Japanese regulations
applicable to each token vary depending on the ICO scheme involved.

15.1 Securities-type Tokens

A token may be deemed to constitute equity interest in an investment fund (i.e., acollective investment scheme) under the Financial Instruments and Exchange Act ofJapan (the "FIEA"), if the proﬁts of the issuer are distributed to the holders of suchtokens in accordance in the ratio of each holder's ownership of tokens. The issuers oftokens that are deemed equity interests in an investment fund are regulated by the
FIEA.

In such cases, the oﬀering of tokens must be conducted by a duly-registered Type II
Financial Instruments Business Operator, unless the oﬀer constitutes an exempt
private placement restricted to Qualiﬁed Institutional Investors and the like, pursuant
to Article 63 of the FIEA. If the token also falls within the deﬁnition of “Virtual Currency”
under the PSA, the token would be subject to regulation under the PSA as well.
However, it is unclear in such a case whether the token issuer would be required tocomply with the requirements of the PSA in addition to those of the FIEA.

15.2 Prepaid Card-type Tokens

Tokens that are similar to prepaid cards, in the sense of being usable as consideration
for goods or services provided by token issuers, may be regarded as "Prepaid Payment
Instruments", and accordingly, subject to applicable regulations under the PSA. It isnoteworthy that a token subject to "Prepaid Payment Instruments" regulations under
the PSA would not simultaneously be subject to PSA regulations applicable to "Virtual
Currency", and vice versa.

15.3 Virtual Currency-type Tokens

Where a token falls within the deﬁnition of Virtual Currency, Virtual Currency-related
regulations under the PSA will apply. Where a token is subject to the PSA, it must be
sold by or through a Virtual Currency Exchange Service Provider.

Based on the prevailing view as well as current practices, where a token issued via an
ICO is already in circulation on a Japanese or foreign cryptocurrency exchange, suchtoken would be deemed a Virtual Currency under the PSA, since a market of exchange
for that token is already in existence. It's worth noting that, due to lack of exchange
restrictions applicable to such token, a token not yet in circulation is also likely to beconsidered a Virtual Currency under the PSA if it is readily exchangeable for Japaneseor foreign ﬁat currencies or Virtual Currencies.

By extension of this reasoning, Virtual Currency-type tokens issued via an ICO would be
deemed Virtual Currencies upon their issuance. Similarly, the sale of such tokens would
constitute the sale of Virtual Currencies. Hence, as a general rule, a token issuer must

be registered as a Virtual Currency Exchange Service Provider if the token sale (i.e.,
the ICO) is targeting residents of Japan. Notwithstanding the foregoing, it has beenargued that a token issuer does not need to undergo registration as a Virtual Currency
Exchange Service Provide if the issuer has completely outsourced its token issuance toa reliable ICO platform provider that is registered as an Exchange Provider.

In summary, under current practice, in order to legally implement an ICO to residents
of Japan, there are two options:(i) ICO issuer acquires a registration as a Virtual Currency Exchange Service Provider
and then distributes its ICO tokens; or(ii) ICO issuer delegates the sale distribution of its ICO tokens entirely to a registered
Virtual Currency Exchange Service Provider.

There are reports that the JVCEA is currently considering the incorporation of the ICO
regulation within its self-regulatory rule. Concurrently, however, the JFSA is also
reviewing the relevant regulation with a view of a discussion by the Study Group. Given
the rapidity of change in ICO practice, for the time being, ICOs are likely to be
regulated by the self-regulatory rule stipulated by the JVCEA. However, it is possiblethat in the future ICOs will be regulated under a speciﬁc law, like the FIEA.

16. Are you aware of any live blockchain projects (beyond proof ofconcept) in your jurisdiction and if so in what areas?
There are several projects that handle data generated on blockchain in various areas,such as securities dealing, international money transfer, asset management, tradingbusiness, etc. Please note, however, that most of these blockchain projects don't
advance beyond being a concept and remain at the stage of demonstrative
experiments. If such projects were to issue digital tokens generated on a blockchain
and then exchangeable with other tokens such as Bitcoin, Ether or the likes, then suchtokens would have likely been deemed Virtual Currency. In such case, the exchange ofsuch tokens with consideration would have likely been deemed a Virtual Currency
Exchange Service. Due to the regulatory uncertainty, our view is that most blockchain
projects will not go beyond the demonstration experiments stage.

17. To what extent are you aware of artiﬁcial intelligence alreadybeing used in the ﬁnancial sector in your jurisdiction, and do
you think regulation will impede or encourage its further use?
While the use of artiﬁcial intelligence in the ﬁnancial sector still appears to be limited,
we can ﬁnd several players in this sector attempting to utilize it in their business. For
example, certain asset managers recently launched mutual funds that use artiﬁcial
intelligence to make automated investment decisions. Certain banks announced thatthey'd launch new loan programs utilizing artiﬁcial intelligence as an automated loan
screening tool in the near future. Certain insurance companies are also attempting toutilize artiﬁcial intelligence to handle insurance claims and examine payments of suchclaims.

In general, the national government of Japan shows a proactive attitude towards theuse of artiﬁcial intelligence. In the ﬁnancial sector, the Financial Services Agency
supported the testing of a project whereby an IT vendor and ﬁnancial institutionsattempted to have artiﬁcial intelligence undertake primary screening of customers'
voices and extract potential compliance breaches and customers' complaints based onthem. It recently announced the successful completion of the project with thestatement that the use of artiﬁcial intelligence would be feasible for this kind ofscreening process.

18. Insurtech is generally thought to be developing but some way

behind other areas of ﬁntech such as payments. Is there muchinsurtech business in your jurisdiction and if so what form doesit generally take?
Insurtech appears to be still behind other areas of ﬁntech, such as payment andcryptocurrency businesses in Japan. While quite a few Japanese insurance companies
appear to be interested in insurtech and, therefore, either attempt to develop their own
insurtech tools or invest in overseas insutech enterprises, we have not seen many

insurtech startups in Japan so far.

19. Are there any areas of ﬁntech that are particularly strong inyour jurisdiction?
[AMT to the editor : Is this question appropriately placed? It seems to be unrelated toInsurtech.]

Cryptocurrency-based businesses were notably active in Japan last year. Japan became
one of the major cryptocurrency trading centers in the world. Since Japan is the ﬁrst
country to introduce a registration mechanism for cryptocurrency exchange businesses
and as the Japanese cryptocurrency market is one of the largest in the world, morethan 100 entities, including foreign ones are in the process of applying for registration.
Other cryptocurrency-based businesses, such as cryptocurrency/ICO investment funds
and mining businesses are becoming popular. Other than cryptocurrency-basedbusinesses, new types of money transfer and payment services have been multiplying.
For instance, Japan Bank Consortium, consisting of more than 60 banks, is launching a
project for the creation of a new money transfer system based on distributed ledger
technology.

20. What is the status of collaboration vs disruption in yourjurisdiction as between ﬁntechs and incumbent ﬁnancial
institutions?
Financial institutions, such as banks or securities corporations, have a strong interest inblockchain technology and are generally favourable to investing in Virtual Currency
Exchange Service Providers. For instance, it is reported that one of the major internet
securities corporations in Japan, acquired 100% of the shares of one of the largest
cryptocurrency exchanges in Japan on April 2018, and another major internet securities
corporation, also invested in a deemed Virtual Currency Exchange Service Provider on
August 2018.

21. To what extent are the banks and other incumbent ﬁnancial

institutions in your jurisdiction carrying out their own ﬁntech
development / innovation programmes?
As noted above, ﬁnancial institutions have a strong interest in blockchain technology.
For instance, it is reported that one of the largest Japanese banks has considered toissue its stable coin fully or preponderantly pegged to the price of Japanese Yen (“JPY”).
A stable coin can be used to pay unspeciﬁed persons or entities for goods or services
provided by them, can be transferable to unspeciﬁed persons or entities and can beconverted to JPY.

A stable coin, fully pegged to the price of JPY(“JPY-pegged coin”) does not fall under the
PSA's deﬁnition of "Virtual Currency". Such a coin is likely to be considered a "Currency
Denominated Asset". Meanwhile, a JPY-pegged coin, being a tool for fund transfer, islikely to be considered electronic money. In order to issue JPY-pegged coins, the issuer
must be a bank, a ﬁnancial institution that is permitted to handle deposits underapplicable laws or a fund transfer business operator registered with the relevant Local
Finance Bureau under the PSA.

22. Are there any strong examples of disruption through ﬁntech inyour jurisdiction?
There are no strong examples of disruption through ﬁntech in Japan. However, eventhough ICO regulation is getting stricter globally and raising capital by ICO is becoming
more diﬃcult, it is reported that the raising of capital by ICO far exceeded that ofventure capital during the ﬁrst quarter of 2018. Although the future development for
ICO in Japan is not clear yet, it is possible that ICOs will be established as one of thecrowdfunding methods.