Financial Council's 5th Meeting Discusses Strengthening Regulations on Crypto Asset Lending, Including Application of Financial Instruments and Exchange Act

On the 7th, the Financial Services Agency held the 5th meeting of the 'Working Group on Crypto Asset Systems' at the Financial Council.

The meeting discussed the strengthening of regulations on crypto asset lending businesses, indicating a direction to include them under the regulations of the Financial Instruments and Exchange Act.

Under the current system, managing crypto assets for staking requires registration as a crypto asset exchange business. However, if the business operates in a 'borrowing' style, it does not fall under management, and can operate without registration, creating a loophole.

The Financial Services Agency highlighted issues where users bear the credit risk and price fluctuation risks of operators, while operators are not subject to segregated management duties or cold wallet management obligations.