The Japanese Financial Services Agency (FSA) has approved self-regulation for the country’s cryptocurrency industry. Now the Japan Virtual Currency Exchange Association (JVCEA) can oversee all cryptocurrency exchanges in the nation. This extension of approval now allows the industry association rights to set up parameters to protect customers.
Japanese crypto exchanges have been the victim of large-scale crypto asset hacks. These globally reported attacks are what, in part, brought about this regulatory body. Japan felt a third-party virtual currency regulatory group would help create rules to safeguard citizen’s digital assets and sanction defaulting trading platforms.
The FSA now has the right to enact rules to protect assets, prevent fraud, stop money laundering, and have general operational standards for exchanges. The JVCEA is a body made up of 16 licensed domestic cryptocurrency exchanges en route to become a ‘certified fund settlement business association.’
The association submitted to FSA to gain recognition and after a two-month review they were considered an accredited group. There were doubts about the group’s ability to self-regulate efficiently, but as of today (Oct 24) the industry association has already begun to “enforce self-regulation rules” according to their site.
The Japanese authorities are still ironing their own ideas about how to regulate this industry hinged on anonymous digital money exchanges. Their main priority at the moment seems to be preventing another exchange theft from occurring. The nearly $60 million Zaif hack that happened in September served as a wakeup call for officials.
The JVCEA has drafted a 100-page self-regulatory document that outlines bans on insider trading and privacy coins. The association is also introducing the idea of a 4:1 limit on margin trading for crypto. This would work to prevent investors from borrowing on their original deposit.
The association seems to be exceeding the expectations of the FSA and taking their self-regulation very seriously. Japan’s unique experience as a country unfortunately notorious for their exchange hacks in the crypto-community, now might end up being able to reserve the trend and have the most regulated and safe exchanges in the world if they continue to execute self-regulation with impressive organization and stringency.