A fintech company in Japan is considered a financial instrument operator and, therefore, is required to be registered. When it comes to AIFs in Japan, the country does not apply special regulation to them: such institutions are governed on the basis of FIEA.
Crypto activities regulation
Although robots are not living advisors, the use of AI applied by managers and advisors is still regulated by FIEA. Yet Japan does not have any special legislation applicable to the use of DLT.
Regulation of crypto exchanges and ICO
In Japan provision of cryptocurrency exchange services is regulated according to the PSA. Once the FEIA amendments will be adopted by the end of 2020, the ICO regulation in Japan should become clearer and more specified.
Cybersecurity and protection of information
Fintech businesses in Japan that are currently in the process of opening and ensuring their security can take each step according to the guidelines for banks and financial institutions published by FISC. The Personal Information Protection Act (PIPA) is a regulation that must be taken into consideration by individuals involved in the processing and transmitting personal data. This document states:
- If requested by its owner, personal information must be deleted.
- Personal information is supposed to be stored safely.
- Without the prior consent provided by its owner, personal information cannot be transferred to 3rd
- If claimed unnecessary for achieving the objective, personal information should not be collected in the first place.
- Owners of the personal information have to be informed by an operator about what data they possess.
Protection of intellectual property and IPR
Software protection can be processed via copyright or patent laws in Japan. Nevertheless, some other countries may not dispose of a patenting opportunity for software, it is necessary to set up a connection between an electronic device and a program used. When it comes to the protection of IPR, generally, IPR infringement is a violation of the law and is subject to criminal penalties. In case of infringement, violators can be charged with damage recovery. In order to ensure that an IPR violation will not be repeated, parties that have been injured may request an injunctive relief or file a lawsuit against a conducted party.
Trade secrets protection
The Prevention of Unfair Competition Act in Japan defines trade secrets as methods of sale or production, other technical and operational information that is possible to use for commercial activities. Criminal prosecution is applied in case of disclosure of such information. If either of the parties in court requests so, disclosure of trade secrets can be prohibited there.
Trademark protection
There are two ways of exercising TM protection in Japan:
- Once a TM was registered;
- Via the Prevention of Unfair Competition Act (under the condition that a TM owner can prove the familiarity of consumers with their product or services).
Conclusion
Japan sees more and more entrepreneurs seeking to open a fintech company there. The Japanese authorities aim for satisfying such demand as well as attracting even more investors to contribute to the economy. Therefore, the local government does not cease to launch further incentives.
COREDO is here to assist businessmen who are interested in registering a fintech company in Japan. We are skilled to provide you assistance and professional advice on fintech regulation in the country. So, if you are about to launch a fintech startup or an investment project in Japan, do not hesitate to contact us.