Japanese Association to Become the Authority for Self-Regulation on Crypto Exchanges
Japanese crypto exchanges may soon have an official self-regulatory body. The Japan Virtual Currency Exchang Association has applied with the country’s financial regulator to become the authority for self-regulation, with the power to enforce guidelines on its crypto exchange members.
Registering with FSA
The Japan Virtual Currency Exchange Association (Jvcea) announced Friday that it has requested certification with the country’s best financial regulator, the Financial Services Agency (FSA). There are 16 government-approved, fully licensed crypto exchanges in Japan; all are members of the Jvcea.
The association explained that it is seeking to become a “certified fund settlement business association,” which will provide as a self-regulatory body for crypto exchanges. Its primary goals include offering “guidance and suggestions to members to comply with regulations, laws and self-regulation guidelines,” the Jvcea’s announcement reads. The association hopes to contribute “to the sound development of the virtual currency exchange industry and the protection of the interests of users.”
According to To-o Nippo Press: The Financial Services Agency will carefully look at the affairs of the association and carefully investigate whether proper group management should be expected. It will take 1 to 2 months for the review.
The Jvcea was set up in response to the hack of Coincheck in January where 58 billion yen (~US$521 million) worth of the cryptocurrency NEM was stolen. It aims to revive public trust in the crypto industry. Japan also has two additional crypto associations which predate the Jvcea: the Japan Blockchain Association (Jba) and the Japan Cryptocurrency Business Association (Jcba). Many crypto exchanges in the country are members of 1 or both of these organizations.
Self-Regulatory Rules Submitted
The association has reportedly drafted self-regulation that includes several restrictions on how crypto exchanges operate. Additional restrictions include a margin limit of 4 times leverage, trading caps for all clients, and trading limitations for minors and the elderly. In June, local media reported that privacy coin listings will be limited and a ban on insider trading will be imposed.
“We also submitted voluntary rules on margin trading and insider trading [to the FSA],” Jiji Press quoted the association: If it [the Jvcea] is approved as a self-regulating organization, it will be possible to enforce disposition and investigation of member exchanges, expulsion of membership…in a mandatory manner.
According to the publication, the FSA “plans to entrust the business with the versatility to rapidly develop technologies and to combine technological innovation and customer security.” The association wrote, “We will work closely with registered digital currency exchange traders and all those who support us while fully working to restore users’ trust in domestic digital currency handlers and markets.”