17 ASIAN LEGAL BUSINESS – JUNE 2023 WWW.LEGALBUSINESSONLINE.COM CRYPTO owning and investing in cryptocurrencies. On the other hand, “security tokens”, which represent shares, bonds or fund interests in tokens, are regulated under the Financial Instruments and Exchange Act (FIEA) as electronically recorded transferrable rights. In May 2020, the PSA and the FIEA made amendments and replaced the term “virtual currency” with “cryptoasset” which brought clarity to the regulation of cryptocurrency exchanges and trading platforms. Based on the market’s current state of development, Japan is trying to align itself with global standards, and even move further. The Japanese authorities are now planning to revise the Act on Prevention of Transfer of Criminal Proceeds to require exchanges to provide user data when sending cryptocurrencies to another exchange, according to multiple reports. In May, Japan signalled its support for suggestions by the Financial Action Task Force (FATF), the world’s money laundering and terrorist financing watchdog, for jurisdictions to implement a cryptocurrency “travel rule,” which requires digital asset firms to share and screen customer data for transfers above a certain threshold. Japan had not yet implemented the travel rule. Japanese politicians have also been encouraging the emerging industry and aim to make it safer. In an October 2022 speech, Japan’s Prime Minister Fumio Kishida said the government will further invest in digital transformation and expand the use of Web3 services. Web3 refers to the next evolution of the World Wide Web, which incorporates concepts such as decentralisation, blockchain technologies, and token-based economics. In September 2022, the government of Japan awarded non-fungible tokens (NFTs) to seven mayors for their achievements in their respective municipalities. This placed Japan as one of the first national governments to use digital