Japan has enacted a comprehensive cryptocurrency law to enhance industry security and transparency. This move follows a $305 million hack on domestic exchange DMM Bitcoin and growing concerns over global exchange instability.
Key Provisions of Japan’s New Crypto Law
Local Asset Storage Mandate
- Exchanges must hold customer assets within Japan to mitigate risks from overseas platform failures.
- Strengthens accountability and reduces cross-border recovery complexities.
Enhanced Anti-Money Laundering (AML) Measures
- Stricter protocols to combat fraud, money laundering, and illicit crypto transactions.
Expanded Crypto Utility
- Legalizes direct cryptocurrency use in apps for purchases/services.
- Updates stablecoin regulations to ensure secure issuance and compliance.
The DMM Bitcoin Hack: Catalyst for Change
In May 2024, hackers stole 4,502.9 BTC ($305M) from DMM Bitcoin. Investigations attributed the attack to North Korea’s TraderTraitor group. Despite initial reimbursement pledges, the exchange will wind down operations by March 2025, migrating users to SBI VC Trade.
👉 How Japan’s crypto laws compare globally
FAQs: Japan’s Crypto Regulatory Shift
Q: How does the new law protect investors?
A: By mandating local asset storage and enforcing robust AML checks, it reduces exposure to international exchange collapses and fraud.
Q: Can stablecoins still operate in Japan?
A: Yes, but issuers must comply with revised rules ensuring transparency and legal backing.
Q: What prompted these regulations?
A: The $305M DMM Bitcoin hack and rising concerns over crypto-related crimes accelerated legislative action.
Restoring Trust in Japan’s Crypto Market
The law aims to rebuild investor confidence through:
- Transparency: Clearer operational guidelines for exchanges.
- Security: Reduced reliance on volatile foreign platforms.