Provisional Translation

Q.

On the 16th, the website of Tech Bureau, Corp., a virtual currency broker dealer, momentarily displayed an erroneous virtual currency price of zero yen, prompting several people to purchase it, and there have been a series of other system breakdowns even among broker dealers registered with the Financial Services Agency (FSA). Coincheck, inc. is a quasi-virtual currency broker dealer but, given that problems are even occurring among registered dealers, please tell us your thoughts on what measures the FSA should take to enhance oversight.

A.

The FSA is already responding in a strict manner, requesting reports from all virtual currency broker dealers on their IT system risk management and, in view of these reports, starting on-site inspections at multiple broker dealers. It is extremely important for virtual currency broker dealers to establish an effective internal control posture that includes IT system risk management for the sake of protecting users, and we must continue striving to ensure their protection through on-site inspections and such.

Q.

Last year, It was agreed on the Financial System Council that to restructure financial legislation by function rather than by business category in order to promote FinTech. Please tell us two things: in what way will this help strengthen the competitiveness of financial institutions, and when should this discussion be brought to an end?

A.

As you know, the legislation governing the financial industry is divided vertically by business category, with the Financial Instruments and Exchange Act, the Banking Act, the Insurance Business Act and so on. The development of financial technology and a variety of other factors continue to make it rather difficult to determine just how far things can be divided by business category. In addition, the situation is such that there are various overlaps laterally among, say, insurance providers, banks, and securities companies, so I think that companies being free to choose from a diversity of business models and subject to the regulations applicable to that business’ functions and risk should stimulate the imagination, the inventiveness, and the creativity of financial institutions and new market participants, and help make Japanese financial industry more competitive. Consequently, the Financial System Council is examining what systems should be in place from a perspective of trying to anticipate this. As for the broad range of discussion topics, it is necessary to sit down and engage in in-depth discussions, and it is only natural that this will require some time. In any case, if we do not respond flexibly to issues, we could in some ways find ourselves unable to keep up with the progress and development of financial technology, so we must address issues in a flexible manner to a certain degree.