Financial Council Establishes Working Groups on Growth Funding and Insurance, Commissioner Mentions On-Chain Finance

Key Points of This Article

• Discussion on the flexible structuring of loan business regulations, including participation of foreign banks in syndicate loans
• Commissioner Kono raises the need to consider the medium- to long-term aspects of on-chain finance
• The same commissioner evaluates the amendment of the Financial Instruments and Exchange Act regarding crypto assets as a "significant advancement"

Financial Council Establishes Two New Working Groups

The Financial Services Agency published the minutes of the joint meeting of the Financial Council and the Financial Subcommittee held on August 31 on the 5th. Minister of Finance Sakuki Katayama consulted on two points: "the way of funding for growth companies" and "the way of the insurance system," and it was decided with the agreement of all attending commissioners to establish working groups (WG) for each to begin discussions.

The consultation on funding focuses on the flexible structuring of regulations imposed uniformly on loans to businesses under the Money Lending Business Act. The secretariat cited as specific examples the regulatory approach to encourage participation in syndicate loans by foreign banks and institutional investors not based in Japan, as well as a review of the requirement of a capital of 1 billion yen or more stipulated by the Non-Bank Corporate Bond Act. Regulations based on written delivery and physical posting will also be reviewed in line with digitalization.

The chair of the funding WG will be Commissioner Kazuhiko Yamamoto. The insurance system WG will address the establishment of a reinsurance captive system and the safety net for life insurance, with Professor Hiroshi Suzaki from Doshisha University serving as chair.

Commissioner Mentions "On-Chain Finance"

Comments related to crypto assets (virtual currencies) were made by Commissioner Kono from the Japan Consumer Association. He pointed out that he has begun to see reports on "on-chain finance," which aims to redesign the core functions of finance based on blockchain, in relation to the review of written regulations. He expressed the view that it is time to consider the "medium- to long-term aspects" of institutional development and social implementation, along with the current review.

At the beginning of his remarks, Commissioner Kono cited the amendment of the law to include the regulation of crypto assets under the Financial Instruments and Exchange Act as a result of last year's discussions, evaluating it as a "significant advancement" alongside support measures for regional finance. The current consultation does not include crypto assets or stablecoins, and there was no discussion on these topics at the meeting.

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