Nomura Research Institute report: Japan's latest payment rules may hinder Bitcoin remittances

Rage Commentary : NRI Senior Advisor Yasutake Okano wrote the Nomura Research Institute (NRI) report, which focuses on the Payment Services Act (PSA), which was passed by the Japanese legislature in May. Under the existing anti-money laundering law and know-your-customer rules, domestic bitcoin exchanges were established in Japan, classifying digital currencies as prepaid payment tools. Although the PSA stipulates digital currency remittances, the maximum remittance amount cannot exceed 1 million yen (US$9,557), which will hinder cross-border transaction remittance services.

Translation: Nicole

A recent Nomura Research Institute (NRI) report argues that despite the latest regulatory regime for Bitcoin and digital currencies, more classification is needed for innovators working on blockchain technology in Japan.

The report, prepared by senior adviser Yasutake Okano, focuses on the Payment Services Act (PSA), which the Japanese legislature passed in May. After months of discussion, the bill will allow domestic bitcoin exchanges to classify digital currencies as prepaid payment instruments under existing anti-money laundering laws and know-your-customer rules.

But Okano believes that the PSA revision does not go far enough, and further updates to the country’s banking act as well as the financial instruments and exchanges act should clarify whether other potential blockchain use cases can be developed.

For example, the report suggests that while the PSA regulates digital currency remittances, the maximum remittance amount cannot exceed one million yen (or $9,557), which is a restriction for prepaid instruments.

"The one million yen transaction limit in the PSA will hinder payment services in cross-border transactions," the report said.

Okano said there should be clearer definitions of digital currencies, such as how they should be regulated under national tax laws, and he said such a move would bring Japan’s regulations in line with the European Court’s decision.

He wrote that while Japanese tax law exempts certain transactions of currency, checks and bills, it does not yet apply to Bitcoin and other digital currencies.

“This still needs a lot of discussion,” Okano said.

Elsewhere, the report found that new regulations could be a “barrier to entry” for digital currency trading firms, but any such drawbacks could be tempered by consumer trust and adoption.