A bill to amend the Act on Settlement of Funds and the Financial Instruments and Exchange Act (FIEA) has passed both the upper and lower houses of Japan’s National Diet and was enacted on May 31, 2019. The amendments enhance the regulations on ICOs (Initial Coin Offerings) by applying the securities regulations under the FIEA when an ICO is an investment program, i.e., the investors expect to receive distribution of profits from the issuer. This form of ICO is sometimes referred to as an STO (Security Token Offering), and the tokens or the rights represented on such tokens issued in an STO are called “security tokens.” STOs will be subject to disclosure requirements, and the issuers or brokers who deal with STOs will be subject to registration requirements under the amended FIEA.

In this GT Alert we explore the following:

• Security Tokens as Collective Investment Scheme Interests
• Disclosure Regime
  • Basic Rules
  • Private Placement
• Distribution & Investment Management Business Registrations
  • Self-Offering by Issuers
• Broker-Dealer or Investment-Manager Registration
  • Article 63 Exemption – Specially Permitted Business for Qualified Institutional Investors (QIIs)
• Schedule

Click here for the full GT Alert.