Organize Japan's legal system and regulations in an easy-to-understand manner

Can I use crypto assets to buy real estate?"
It is natural to ask these questions. In fact, real estate transactions utilizing crypto assets are beginning to occur in Japan.
This article will provide an easy-to-understand overview of the Japanese legal system, including the extent to which it is legal and what procedures and rules are necessary.

Positioning in Japan (legal framework)

In Japan, crypto assets were "positioned as a means of payment" under the Revised Funds Settlement Act of 2017, so payment of real estate proceeds by crypto assets itself is legally permitted.

• Crypto assets are no longer a “prohibited item.”
• Treated as a legitimate means of payment

This is in line with the trend of institutional development not only in Japan but also in Europe and other countries.

Examples of actual cases

In Japan, there has been news of major real estate companies beginning to support the purchase of real estate with crypto assets.

• Acceptance of property purchases in bitcoin/ethereum
• Offered as a service for global investors

The fact is that "buying real estate with crypto assets per se" is no longer an uncommon story.

However, in practice, the following issues are also being considered at the same time.

• by being treated as a sale.Tax Issues
• At the time of acquisitionTreatment of Valuation and Conversion Rates
• In high value transactionsComplicated procedures

For these reasons, in actual transactions, "Use crypto assets as collateral rather than paying directly for them, and purchase real estate in Japanese yenIn many cases, the choice is made to "buy a new house".

If this is the way,

• No need to sell crypto assets
• Easy to organize for tax purposes
• Easy to adapt to Japanese real estate transaction practices

and other practical advantages.

Therefore, we are now at the stage where, while "crypto assets can now be bought with crypto assets," in many cases it is actually more reasonable to utilize collateral loans.

Legal compliance points for transactions

Even if it is legal, there are points that should be checked in practice.

Even when using crypto assets as a means of payment, real estate agents must comply with the following laws and regulations

• Identification (KYC) in accordance with the Act on Prevention of Transfer of Criminal Proceeds
• Confirmation of the origin and history of crypto assets
• Compliance with rules under the Funds Settlement Act

Especially for high value transactions, strict verification procedures are required for both the customer and the business.

Points that can be easily misunderstood

The fact that crypto assets "can be agreed upon as a means of payment" does not mean that they are instantly and freely available in all cases.

Typical points to note are as follows

• Separate registration is required to conduct crypto asset receipt, brokerage, and financing as a business.
• Providing services without registration may be illegal.
• Financial products and lending schemes are subject to further regulation on an individual basis.

These points need to be sorted out not only from the perspective of the Funds Settlement Law, but also from the perspective of the Financial Instruments and Exchange Law and the Money Lending Business Law.

Summary: Organizing to eliminate anxiety

• Not that crypto assets themselves are illegal.
• Legal compliance is required when used as a means of payment
• Stricter identification and source of funds verification in transaction practices
• It is important that registered vendors provide legitimate services.

Real estate transactions utilizing crypto assets are an "option that is being organized" rather than prohibited under the Japanese legal system.

Next time,Taxes and precautions when crypto assets are pledged as collateralThis section provides a practical perspective on the following topics.