With the interest in cryptocurrency remaining high, many countries are facing their own problems when dealing with the digital coins. This includes Japan.
The country has been wrestling with cryptocurrency for quite some times, that until the government decided to give in. As a response to the rapidly changing cryptocurrency market, the Japanese Financial Services Agency (FSA) has given the permission for the cryptocurrency industry in the country to regulate itself.
The FSA approval, gives the Japan Virtual Currency Exchange Association (JVCEA) the power to regulate the sector, safeguard customer assets, give operational guidelines, elaborate on anti-money laundering policies and provide necessary compliance guidelines for cryptocurrency exchanges in the country.
It also allows the association to police exchanges for any violations, allowing the industry to make and enforce regulations without needing any government approval.
"It’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do," explained a senior FSA official in a briefing.
Prior to the regulator’s approval, JVCEA had drawn up a set of self-regulatory rules proposing, among other measures, a ban on the trading of privacy-centric cryptocurrencies, such as Monero, on cryptocurrency exchanges.
JVCEA here, was established in April 2018, in an association of 16 licensed cryptocurrency exchanges in Japan. It was launched as a concerted effort among the exchanges to safeguard investors’ assets and regain local confidence in the industry in the aftermath of multiple hacks, like the $530 million Coincheck hack and the Zaif hack.
The association first submitted a formal application to the FSA in August 2018, asking for recognition and the power to self-regulate itself.
Previously. Japanese netizens were one of the worst affected by cryptocurrency hacks, having lost over $540 million in the first half of 2018. That excludes the whole Mt. Gox saga. Japan is also the first country to regulate cryptocurrency exchanges, as it encourages technological innovation while ensuring consumer protection.
Exchanges of cryptocurrency in the country have to register with FSA.
"We will make further efforts to build an industry that is trusted by customers," said the cryptocurrency industry association in a statement following the FSA approval.
FSA has also published a set of guidelines for those applying to run cryptocurrency exchange. The agency said there are about 160 entities that expressed interest.
