Japan’s primary financial regulator has formally granted the cryptocurrency industry with a self-regulatory status by allowing an industry 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 so, the regulator has bestowed the industry body with the means to create guidelines for domestic exchanges including strict measures to curb insider trading and money laundering while implementing security standards to safeguard customer assets.
As reported previously 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 theft of cryptocurrency from Tokyo-based exchange Coincheck.
In August, the industry association formally submitted an application with the FSA to gain recognition. A rigorous two-month review ensued wherein the regulator sought to “carefully examine the affairs of the Association and investigate whether proper group management can be expected.”
The industry association confirmed its accreditation in a statement on its website today, stressing it has “enforced self-regulation rules on the same date.”
“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 regulatory approach toward the industry in the aftermath of two seismic crypto thefts this year. After the infamous Coincheck theft 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 including a proposal a complete ban on insider trading and privacy coins like Monero and Dash from licensed exchanges. The association has also proposed a 4-to-1 limit on margin trading with cryptocurrencies, restricting the amount of funds investors can borrow on their original deposit.