Once home to one of cryptocurrency's most notorious meltdown, Japan surprised crypto-markets yesterday as the domestic financial authority clears accreditation for exchange self-regulation.
The statement published by the Japanese Virtual Currency Exchange Association (JVCEA), a group of several registered crypto-exchange, showcases Japan's progressive views towards the digital asset boom.
Industry association to become domestic crypto-police
After two multi-billion exchange hacks, the Japanese government decided to fade away from direct involvement with virtual asset exchange. The Financial Services Agency granted the JVCEA the rights to establish guidelines on critical issues that the industry is facing, including customer protection, custodian security, money laundering and compliance.
“It’s a very fast-moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do,” a FSA official told Reuters.
Japan at the forefront of progressive regulation
Last year, Japan became the first country to offer clear regulation towards cryptocurrency exchanges. Trading platforms have to formally register with the FSA. But the policy came short, after two major attacks on domestic platforms.
Tech Bureau Corp, a software company reported a $60 million loss through its subsidiary Zaif last month. Nothing compare to CoinCheck's mind-boggling theft. The Tokyo-based exchange reported in January that 58 billion yen ($524 million) worth of NEM had been taken from customers' wallet.
The self-regulation initiative is an attempt to fast-track innovation in the sector and build a secure and responsible environment for cryptocurrency trading.
A senior partner at Japanese law firm Atsumi & Sakai tol Reuters: "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,"
The relationship between JVCEA and FSA has not be described explicitly, but it is likely that the government watchdog will still have a clear visibility on the industry's actors.
The FSA has approved 16 exchanges to operate in Japan without granting new licences as of 2018.