Huobi Token (HT), the native token of the Huobi exchange, is the first international token to be approved by Japanese regulators.

Following approval by the Financial Services Agency (FSA) of Japan, HT will be able to start trading in the world’s second largest digital asset market starting May this year.

Currently, only 25 more tokens have been allowed on the FSA’s whitelist as Japan tightened regulations to better identify crypto assets.

Last year, the Japanese House of Representatives amended the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA), which came into force on May 1.

Law firm Morrison & Foerster LLP reports that some of the changes will increase protection for investors in crypto assets. A current analysis by the company explains that crypto-custodial providers who are not active in the trading and brokerage business are also subject to the new PSA regulations.

Additional arrangements for the exchange

Cryptocurrency derivatives are also audited under FIEA regulations and related companies must be registered to operate in the Japanese crypto industry. Transactions in cryptocurrency derivatives that are processed through the distribution of digital assets – previously regulated under PSA – will also be part of the FIEA mandate.

Cryptocurrency custody providers must register with the Crypto FSA after May 1st.

New requirements under PPE

Among the inquiries about client assets proposed in the PSA amendment, the safeguards surrounding user custody are noteworthy as these deposits must be held in an escrow account. Exchanges are obliged to store digital assets in cold wallets or the like.

PSA also mandates that any portion of these assets held in hot wallets may be 5% or less of the total value of client assets held in trust.

A report by Tokyo-based law firm So & Sato claims that strict regulations in Japan can benefit new players in the long term.

Disclaimer: This information is provided as a personal blog and not as general information or investment advice. We are not responsible for your investment decisions.

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