Japan is again showing that is by far the most advanced nation regarding cryptocurrency regulation. On October 24, Japan’s Financial Services Agency (FSA) granted permission to the Japan Virtual Currency Exchange Association (JVCEA) to start cryptocurrency self-regulation. In practice, that means that JVCEA will create guidelines and monitor local crypto market.
JVCEA will consist of representatives from all 16 licensed domestic cryptocurrency exchanges. As a self-regulated body, JVCEA will propose new and much stricter laws in order to regain public trust. The new measures will restrict insider trading and money laundering. In addition, due to the recent exchange hacks in Japan, cryptocurrency self-regulation will bring improved security standards that should protect investors’ assets.
Cryptocurrency Self-Regulation Should Prevent Further Crypto Thefts
Talks regarding cryptocurrency self-regulation started back in April. They were initiated after the biggest cryptocurrency exchange hack. In January 2018, Tokyo-based exchange Coincheck suffered a huge hack in which investors lost more than $530 million. What may have sped up the cryptocurrency self-regulation in Japan is the second exchange hack. Popular exchange Zaif lost $60 million in bitcoin, bitcoin cash, and other cryptocurrencies in the September hack.
Yuri Suzuki, a senior partner at the law firm Atsumi & Sakai, stated that after these large-scale hacks, investors and the public were expecting a lot from the new measures. However, JVCEA will have a huge challenge due to the initial heavy workload. The question is when and if they will find adequate experts to tackle all arousing issues.
New Rules on the Playground
For the past half a year, JVCEA has been working on a set of rules that should bring stricter regulation of Japan’s crypto market. Supposedly, the new “playbook” will fully ban the insider trading and privacy coins like Monero and Dash from licensed exchanges. In addition, there will be a limit on a 4-to-1 margin trading. Investors should expect a bigger restriction regarding funds that they could borrow.
Also, the new regulation will be much harsher when it comes to issuing new exchange licenses. Since December 2017, FSA didn’t grant any new licenses. Therefore, the new cryptocurrency self-regulation will make this process even stricter, as JVCEA will go into more details than before.