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Nagashima Ohno and Tsunematsu Overview of FSA Bill




Nagashima Ohno and Tsunematsu STO FSA Bill

The highly acclaimed legal firm of Nagashima Ohno and Tsunematsu released a commentary on a proposed Japanese FSA bill this week. The bill was first proposed by the Japanese Financial Services Agency (FSA) on March 15, 2019. If passed, it would make a final distinction between security tokens and other forms of cryptocurrency. Consequently, Japanese STOs would see increased regulations.

The law firm Nagashima Ohno and Tsunematsu decided to make life easier on the crypto world when they published their insightful commentary on the new FSA bill. To better understand the proposed changes, you first need a brief rundown on the current legal status of crypto in Japan.

Japan Crypto

Currently, all forms of cryptocurrency in Japan fall under the Payment Services Act (PSA). The PSA is very broad in its description of crypto. In fact, it labels all crypto “virtual currencies.” Analysts noted that this high level of ambiguity slowed mainstream adoption in the country as major investment firms need clear regulations.

So What’s in the FSA Bill?

According to Nagashima Ohno and Tsunematsu, the proposed bill points out numerous areas in need of clarification. The first issue addressed by the bill is the use of the term “virtual currencies.” The FSA wants the term removed and replaced with “crypto assets”. This distinction is important when you consider that most cryptocurrencies are not used at currency at all.

Nagashima Ohno and Tsunematsu via Homepage

Nagashima Ohno and Tsunematsu via Homepage

Also in the new bill, crypto assets will be, for the first time in Japan, different than tokenized securities. Consequently, the FIEA will have the power to determine which category an ICO falls under. Additionally, all exchanges operating in the country must register for licensing as a “Crypto Asset Exchange Service Provider.”

FSA Customer Safety

Consumer protections in the bill include requiring the use of “cold wallets” by exchanges holding user’s crypto when not in use. Also, businesses would need to provide a plethora of background and management information to the FIEA before embarking on a blockchain-based crowdfunding venture.

False Advertising

Another important aspect of the FSA bill is an increase in penalties for false advertising and soliciting. This proposition falls in line with the SEC, who, recently filed charges against the Rapper the Game and a Former Beauty queen for promoting the Paragon ICO.


All exchanges operating in Japan would need to adhere to strict KYC and AML regulations if the bill becomes law. The requirements would make anonymous exchanges a thing of the past in Japan. This could be a move that may be difficult to achieve from a technical aspect when you consider the ever-growing number of decentralized exchanges emerging.

Asian Exchange Licensing in the Past

The Exchange Licensing area of the bill could see some backlash from the Asian cryptocommunity as the licensing requirements were not included. This type of vagueness is reminiscent of when China initially shut down its exchanges in 2017. Luckily, Japan is pro-crypto, so the chances of this happening in the Land of the Rising Sun are slim to none.

Nagashima Ohno and Tsunematsu

The firm of Nagashima Ohno and Tsunematsu is a multinational law firm that offers premier legal services to those seeking to do business in Japan. The firm has offices in New York, Tokyo, Singapore, and Bangkok. Notably, Nagashima Ohno and Tsunematsu are one of the “Big Four” Japanese law firms in the country.

Japan Crypto

Japan continues to see increased STO activity with one report placing 2019 Q1 growth up 130-percent. Both investors and traditional investment firms desire updated regulations that include terminology relevant to the crypto space. This latest bill is an attempt to alleviate some of these concerns.

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David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including


Kin Releases its Transparency Report




Kin Delivers New Transperancy Report to Regulators

In response to SEC pressure, KiK’s Kin Foundation released a transparency report this week. The data includes Kin’s structure, processes, and budget. Kin has been enthralled in a legal battle with the SEC for months for their 2017 $100 million ICO. Importantly, the report provides regulators and the public new insight into the firm’s inner-workings. Company executives believe the information clarifies the true token taxonomy of Kin.

The news showcases continued SEC pressure on the ICO community. Regulators continue to pump the breaks on large tech companies’ crypto projects. This year has seen the SEC halt Facebook’s Libra, Telegram’s TON, and a host of other high-profile projects. Additionally, the maneuver highlights KiK’s determination to fulfill their blockchain aspirations in the face of intense regulatory push-back.

Kin Foundation

According to the report, the Kin Foundation is an informal community of 10 members and a representative, The member’s tasks include reviewing kin rewards and disagreements in the community. Interestingly, the report reveals that Kin representatives are to act as communication points between developers and token holders. Notably, Kin only has one representative, Matt Hannam, at the moment. However, the report explains that plans are underway to add more representatives in the coming weeks.

The foundation lists Ted Livingston, the CEO of Kik Interactive and William Mougayar, author of “The Business Blockchain” as it’s directors. Importantly, Kin members decide on their board yearly. This decision happens prior to budget drafting. Here, executives configure spending for every aspect of the business including developers, node incentives, marketing, and operational costs.

Ted Livingston - CEO of Kik Interactive - Kin Director

Ted Livingston – CEO of Kik Interactive – Kin Director

Kin Booms

Surprisingly, the report revealed some previously unknown information regarding Kin’s usage and adoption. To date, Kin already registers over 28 million users. This community averages around 300 million kin in daily transaction volume. This information demonstrates an impressive rate of adoption for the token.

Standing Firm

With their transparency report in hand, Kin prepares to make their case yet again. Importantly, executives pointed to the recent miss-handling of the Telegram case as evidence that changes must take place. Specifically, Kin believes regulators need to avoid correlating Grams to Kin.

SEC Seeks Early Judgement

In March, regulators believed they had Kin on the ropes. The SEC requested an early summary judgment against the firm. The judgment was to seek a permanent injunction against the project. Additionally, regulators wanted a variety of fines and penalties placed against the firm.

Kin Foundation

The Kin Foundation is the non-profit organization for the hugely popular messaging app Kik. Kin entered the sector officially in 2017 with the goal to promote and help build the Kin ecosystem. Since its inception, Kin has made major headway within the blockchain sector.

Kin Time

Despite having logic on their side, Kin still faces an uphill battle. To date, the SEC has shown no signs of budging on their refusal to approve any crypto projects originated from major social media platforms. Hopefully, regulators will take the time to evaluate each of these cases separately and understand that innovation is at the doorstep. Its time to let him in.

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Raiffeisen Bank in Cooperation with FinTech Billon to Pilot Digitized National Currency




Raiffeisen Bank in Cooperation with FinTech Billon to Pilot Digitized National Currency

The transformation of the payments industry is in full swing. Driven by FinTechs, the payments technology innovation brings new ways of transacting on a global scale, with easier on-boarding, reduced waiting times and lower fees.

It’s no surprise that FinTechs also experiment with blockchain-based platforms that allow for tokenized representation of assets. One such platform is being developed by Billion, a British-Polish FinTech that is currently working with Raiffesen Bank on end-to-end digitized national currency transfers.

Raiffeisen to Pilot Digitized National Currency Project

According to a report, the Austrian banking giant successfully tested Billon’s tokenization platform, dubbed RBI, and moved the project from a proof-of-concept to a pilot project.

Borne out of Raiffeisen Bank International’s (RBI) Elevator Lab acceleration program, the tokenization platform is based on Billon’s distributed ledger technology (DLT) with the goal to enable tokenization of national currency.

Billon was founded in 2015 and is a FinTech company working on integrating national currency transactions, document and identity management tools into a single architecture.

The goal is to bring blockchain capabilities into the regulated world. This is in line with the global trend of commercial and central banks building blockchain-based infrastructure that comply with payment and data regulations.

FinTechs Augmenting Banks

The system from Billon enables banks to complete transactions that have higher settlement speeds, accurate payment status, reduced exception handling and as a result reduce customer inquiries.

Transactions with this system can have additional data or documents attached to them, accelerating the verification and validation process for e.g. the source of funds. Consequently, transfers are quickly settled and cleared while maintaining a clean audit trail and full transparency.

Both Billon and Raiffeisen Bank International plan to pilot the digital currency by the end of this year. The trial is set to include RBI’s corporate and institutional clients. Should the test period be successful, the Austrian bank could start using it in Central and Eastern European (CEE) countries where it has an extensive presence.

Stefan Andjelic, blockchain hub lead at Raiffeisen Bank International, spoke of the necessity of banks having to partner with FinTechs to meet new consumer demands:

“Billon is a great example of a fintech that understands how to adapt blockchain to serve the needs of banks and their clients. Specifically, during the COVID-19 situation, banks need to partner with fintechs to innovate faster and help clients with payments processing and liquidity needs.”

The full extent of the benefits from a tokenized platform are yet to be felt when deployed in a full working environment, but Billon expects the bank to improve customer experience, differentiate its offering and achieve cost efficiencies at several steps during the process.

Blockchain and Banking

There is a noticeable trend amongst commercial and central banks to develop new payment rails and exploring blockchain-based solutions.

Among the first household names in the financial world to entertain the idea of a digital currency was JP Morgan with its own JPM Coin that is marked for settling internal transfers for its corporate clients. Nonetheless, up to this day there is no update from the banking giant about fully deploying the JPM Coin.

At the same time, many central banks across the globe are taking decisive steps to launch their own digital currencies, clear examples being People’s Bank of China with the digital Yuan and the Banque de France testing a digital version of the Euro.

At the highest level, institutions are studying the feasibility of digital currencies and how these can be implemented in the current monetary environment.

VISA is another company whose involvement with digital currencies testifies the looming change in how payments are made. The payments giant has also filed for a patent in the United States to develop a digital fiat currency.

The Trend to Go Digital

The willingness to bring forth a digital version of a currency has also been exacerbated by the current COVID-19 pandemic. Transitioning to an almost fully digital experience could become a prerogative for many companies.

In the wake of the pandemic outburst, the Bank for International Settlements (BIS) published a report on how physical cash could transmit viruses, including the COVID-19. As a result, the BIS advised financial institutions to utilize digital methods of payment transactions, while advocating for central bank digital currencies (CBDC).

With this new blockchain-based initiative with Billon, Raiffeisen Bank is definitely on track to bring better digital payment methods to their offering.

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TON Project Shutters its Doors as the SEC Prevails






Like much of the world, we have been following, and reporting on, the situation developing around Telegram vs. SEC, for months now.

After a long battle, Telegram CEO, Pavel Durov, has announced that the company is giving up their battle against the SEC, and closing the doors on TON.

“I am writing this post to officially announce that Telegram’s active involvement with TON is over.”

Disdain for the U.S.

If one thing was made clear from the message, released by Pavel Durov, it is a certain level of disdain towards the regulators within the United States.  From an outside perspective, this is an understandable mindset.

When referencing a U.S. court decision to ban the global sale of GRAM tokens (not just within U.S. borders), Pavel Durov had the following to say.

“This court decision implies that other countries don’t have the sovereignty to decide what is good and what is bad for their own citizens.”

He continued

“…we, the people outside the US, can vote for our presidents and elect our parliaments, but we are still dependent on the United States when it comes to finance and technology (luckily not coffee). The US can use its control over the dollar and the global financial system to shut down any bank or bank account in the world. It can use its control over Apple and Google to remove apps from the App Store and Google Play. So yes, it is true that other countries do not have full sovereignty over what to allow on their territory. Unfortunately, we – the 96% of the world’s population living elsewhere – are dependent on decision makers elected by the 4% living in the US.”

A Timeline

Perhaps the best way to understand the timeline, surrounding events throughout this saga, is to look back at our past articles.

Arguably, the inciting incident, which ramped up tensions between Telegram and the SEC, dates back to September of 2019.  At this time, an email had leaked, which indicated the potential for Telegram to distribute GRAM tokens earlier than originally planned.

GRAM Token – Telegram Mulls Early Release

While rumblings of regulatory issues occurred prior to October 12th of 2019, is was on this date that the SEC filed for a restraining order against Telegram, and its subsidiary, TON.  At the time, representatives from the SEC stated, “Our emergency action today is intended to prevent Telegram from flooding the U.S. markets with digital tokens that we allege were unlawfully sold…”.

SEC Issues Emergency Action, Halting ‘Gram’ Issuance

From this point on, a fierce battle ensued, with the SEC maintaining the stance that GRAM tokens were, indeed, securities.  Along the way, Telegram did experience some small victories.  In January of 2020, they successfully convinced the presiding judge to deny the SEC access to Telegram’s full banking records.  These efforts by the SEC prompted strong words from Telegram, likening SEC efforts to a ‘fishing expedition’

District Court says ‘Request Denied’ to the SEC

Telegram Likens SEC Request to a ‘Fishing Expedition’

At this point, it wasn’t just news outlets that were taking notice of the situation.  February of 2020 marked the first time that an outside regulatory body was probed for their input on the situation.  In this instance, the courts reached out to the CFTC, asking how they would classify GRAM tokens per their standard practice.  While not solicited by the courts, outside groups, such as the Blockchain Association, also took the time to weigh in on the situation.

CFTC to Give its Stance on GRAM Token Classification

Blockchain Association (BA) Shows Errors in SEC Telegram ICO Case

By the time March of 2020 rolled around, investors were weary of the proceedings.  Between months of wondering what would happen to the project, and the growing COVID-19 pandemic, many had accepted the notion of a refund.

Telegram Investors Ready to Take Refunds Amid COVID-19 Pandemic

When news of interest in a payout broke, it was only weeks later that Telegram announced the first structuring of a potential investor refund program.  While this was welcome news for many, it was only a short time later that U.S. investors were made ineligible for this possibility.

Telegram Postpones GRAM Token Issuance and Offers Investors Refunds

U.S. Investors Ineligible for 110% Telegram Payout


That brings us to the present, ending a months long battle which saw both sides win small victories;  A process that saw token distribution delayed multiple times, outside influences, and refund programs derailed for many.

Lesson Learned

Regardless of whether you side with the SEC or Telegram, in this case, it served as a teaching tool for any company contemplating a similar path.

Perhaps, Telegram and the TON project were made examples of in the crypto-sector justly so – or maybe the SEC the U.S. Court did, indeed, overstep their bounds.  Perceptions fluctuate, however, this time around, Telegram was perceived to have been in the wrong.

For those interested in learning more about what distinguishes a security token from a utility token, make sure to peruse a past contribution to our ‘Thought Leaders’ series by Constantin Kogan of BitBull Capital.

The Howey Test: The Fine Line Between a Security Token and a Utility Token


Telegram is a popular messaging platform, available on PC, iOS, and Android.  The TON project, was an endeavour built upon Telegram, which would facilitate the value transfer through the use of GRAM tokens.  While this project is now shut down, Telegram continues to operate, as popular as ever.

CEO, Pavel Durov, currently oversees company operations.

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