- Self-regulatory status that allows JVCEA to monitor and sanction cryptocurrency exchanges for any violations.
- Self-regulation will enable industry gain public trust.
Japan’s financial regulator has granted the cryptocurrency industry body the legal means to formulate guidelines for domestic exchanges. This will include creating regulations to check insider trading, anti-money laundering (AML) and security standards to protect customer assets.
FSA Grants the Status
The Financial Services Agency (FSA) formally announced the approval this Wednesday, October 24, 2018, granting the Japan Virtual Currency Exchange Association (JVCEA) self-regulatory status that allows the association to monitor and sanction cryptocurrency exchanges for any violations.
The Japanese government has been appraising its approach towards the emerging crypto industry especially after two large-scale theft incidents that have affected local cryptocurrency exchanges.
The JVCEA, which is a body comprising all the 16 licensed local cryptocurrency exchanges, will now become a certified fund settlement business association and will provide operational guidelines and police compliance. Commenting in anonymity, a senior FSA official stated during the briefing:
“It’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do.”
The Japan Virtual Currency Exchange Association (JVCEA) resulted from efforts by the country’s licensed exchanges to create a self-regulatory body for the industry following the $530 million heist from the Tokyo-based Coincheck exchange hacking.
The industry association formally submitted their application to the FSA in August for official recognition. This was followed by an arduous two-month appraisal where the country’s financial watchdog took the time to “carefully examine the affairs of the Association and investigate whether proper group management can be expected.”
JVCEA has confirmed its official approval in a statement on its official website today and has stressed it has started enforcing self-regulation rules immediately. The statement read in part:
“With the acquisition of the accreditation, we will continue to make further efforts to create an industry that you can trust from everyone who uses virtual currency with members [exchanges].”
Good Times Ahead?
The approval by FSA has happened at a time when the Japanese government is reviewing its own regulatory approach towards the industry that is reeling under the weight of two huge crypto thefts. The latest incident involved the theft of close to $60 million in Bitcoin, Bitcoin cash and Monacoin from Zaif Exchange only last month.
FSA has reiterated that the cryptocurrency industry needs a tougher regulatory approach without stifling growth. A senior partner of Atsumi and Sakai law firm Yuri Suzuki she believes the industry will regain public trust through self-regulation. She stated:
“The self-regulatory body’s workload is likely to be heavy and there is an issue of whether it can secure enough staff with expertise in crypto exchange business.”