Japan’s primary financial regulator has formally granted the cryptocurrency industry with a self-regulatory status by allowing an business body to police domestic exchanges.
The financial Services Agency (FSA) on Wednesday approved the Japan Virtual Currency Exchange Association (JVCEA), a body comprised of all 16 licensed domestic cryptocurrency exchanges, to become a ‘certified fund settlement business association.’
In doing thus, the regulator has bestowed the business body with the suggests that to make guidelines for domestic exchanges as well as strict measures to curb insider trading and money laundering whereas implementing security standards to safeguard client assets.
As reported antecedently in April, the JVCEA was a marked effort among Japan’s licensed exchanges to launch a self-regulatory body for an industry reeling in the aftermath of a $530 million stealing of cryptocurrency from Tokyo-based exchange Coincheck.
In August, the business association formally submitted an application with the FSA to achieve recognition. A rigorous two-month review ensued whereby the regulator sought to “carefully examine the affairs of the Association and investigate whether proper group management will be expected.”
The industry association confirmed its accreditation in a statement on its website today, stressing it's “enforced self-regulation rules on the identical date.”
It added:
“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].”
The FSA’s approval comes at a time when Japanese authorities are reviewing their own regulative approach toward the industry in the aftermath of two seismic crypto thefts this year. After the disreputable Coincheck stealing in January, licensed cryptocurrency exchange Zaif was hacked for nearly $60 million in bitcoin, bitcoin cash and monacoin in September.
The JVCEA has reportedly drawn up a 100-page self-regulatory draft with rules as well as a proposal a complete ban on insider trading and privacy coins like Monero and Dash from licensed exchanges. The association has also projected a 4-to-1 limit on margin trading with cryptocurrencies, restricting the quantity of funds investors can borrow on their original deposit.
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