UK and Japan Transaction Laws Japanese Regulation and Law on Digital Assets 1. Regulation 2. Domestic Private Law 3. International Law Global Regulatory Landscape Country Regulations: FATF asked member countries to adopt registration or license system in 2015 China Crypto Assets Banned in 2021. Japan Registration System: .  Funds Payment Act  2019 Reform: Customer Assets Trusted.  2022 Reform: Stable Coin partly permitted EU MICA: License system from 2024. UK License system, and 24h consumer cooling-off in Oct. 2023. US Under Reviews: Early adoption of Regulation is requested to Congress by White House in Jan. 2023. Crypto Assets: UK vs Japan UK Law 1. Protection in Bankruptcy Protected as property. Can be protected as trust, and constructive trust, too. 2. Crypto-Assets Exchangers a. FCA issued license and require to meet some regulations. b. BINANCE issue exist in UK. 3. Stablecoins: The Financial Services and Markets Bill passed the UK House of Representatives in June, 2023. Japanese Law 1. Protection in Bankruptcy a. Not protected as property because Art. 85, Civil Code limits property to tangibles (German trad., France and Dutch is different). Need legislation to amend Art. 85, or to adopt UNIDROIT principles to protect the proprietary rights. b. Can be protected as trust (we have no constructive trust), which is regulatory required to exchangers. 2. Crypto-Assets Exchangers in Japan have been registered and regulated by FSA. BINANCE issue exist in Japan. 3. Stablecoins in Japan: Domestic issuance and the treatment of foreign stablecoins backed by legal tenders are permitted by the Reformed Funds Payment Act effective in June 2023. Overseas Monitoring - [Issue] BINANCE, remained operational in Japan despite a warning from Japan's Financial Services Agency (FSA) to register with the FSA in March 2018 and June 2021, and still not registered in Japan. The limits of legal execution across national borders have been reported, also in the UK, US, Germany, Singapore, and Hong Kong. - [Question] How to sanction such disobeying crypto exchangers? Cf. As a response to severe criticism, BINANCE has obtained license in Italy, Spain, and Dubai, and reported that they started considering to register in Japan. - Proposal of Blocking: [Answer] Though legal solution is slow and ineffective, it is technically feasible to identify and block major crypto exchangers such as BINANCE, to some extent. a. Current: No sanction. b. DNS Blocking (ex. Child porno): weak sanction, but it is enough deterrence for BINANCE, which cannot change the web address so often. UK and Japanese Transaction Laws 1. UK Law: Simon Gleeson, The Legal Concept of Money, Oxford, 2018 2. Difference from Japanese laws Even if the digital currency has no substance, it can be considered as a thing in UK, while not in Japan (according to our German tradition of Civil Code Art. 85, which restricts property as tangible). In general, UK law is more flexible to adapt changes. 3. "Proprietary right"= property + claims +....> property: by protecting rights on digital currencies by analogous legal interpretations of property (prevailing academic view but has not adopted by the courts). Proposal 1: Domestic 1. Protection under Bankruptcy in Japan a. Legislation as Property by specifying legitimate crypto-assets (my idea); b. Legislation as Proprietary modeled after the UNIDROIT Principles (a bit worried about the differences of "proprietary" from country to country); c. No legislation but Interpretation as Proprietary Rights (the courts may not take this view). However, almost all the Japanese crypto assets have been traded by registered exchangers, which are regulated to trust customer assets and will be safe under the bankruptcy even now. Even in case of CBDC, Japanese CBDC will likely be Account type, not Token type, which does not need legislation. 2. BINANCE (Extraterritorial supervision in the Internet space): To adopt "DNS blocking" like in child pornos. 3. Stablecoins Stablecoins are not risk-taking, but I support the Japanese government's cautious stance of allowing the legal tender backed stablecoins only and keep the ban on risky stablecoins. Hypo Case: JPY version of e-CNY 1. Hypo: China globalized e-CNY successfully and provided to offer large-scale JPY version of e-CNY, based on its JPY reserves and accounts in China. 2. Is it impossible? No. Napoleon counterfeited Austrian currency in 1805-1810. In US, the Chinese CBDC Prohibition Act (H.R.804) is submitted in Feb. 2023. 3. Extraterritorial Application of Japanese Laws: a) based on protectionism, the crime of currency counterfeiting can be applied extraterritorially (Penal Code Art. 2 (4)); b) however, since the current law is based on paper currency, the law needs to be revised to accommodate digital CBDC; c) even if applicable, execution to PBOC in Beijing is difficult. 4. Filing with ICJ takes time and domestic crackdown is imperfect, while JPY version of e- CNY can prevail quickly. 5. Possible Reactions: a) To disconnect e-CNY technically if possible (loophole is inevitable); b) To prepare quick solving soft-law mechanism in G20.