The Japanese Financial Services Agency (FSA) has granted the Japanese Virtual Currency Exchange Association (JVCEA) authority to regulate themselves and enforce rules which protect consumers, prevent theft and standardize how cryptocurrency exchanges work.
Japan is making this move despite already having special regulations in place for virtual currency businesses. These regulations were put into effect in April of 2017, after the devastating Mt Gox heist of 2014. This made Japan the first developed country to regulate the cryptocurrency industry in such a unique way.
Faith In this regime has been shaken, however. In January earlier this year, hackers were able to rob the Coincheck cryptocurrency exchange for $534 million U.S.D. This theft revealed gaps in the governments’ policy regarding cybersecurity and revealed how difficult it is for official regulators and sanctions to keep up with the ever-evolving crypto industry.
The JVCEA is comprised of representatives from multiple cryptocurrency exchanges in Japan. By granting them this self-regulatory status, it is hoped that more efficient sanctions and regulations will be put into place at a quicker speed. A senior FSA official elaborates on this, as reported by Reuters:
“It’s a very fast-moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do”.
It is noted by Yuri Suzuki, a senior partner at Atsumi & Sakai law firm, that the new rules which are being set by the JVCEA are severe compared to the current regulations in Japan. It is hoped that this will help bring consumer confidence back into the cryptocurrency economy.
Japan is not the only country looking to adapt to the pace of cryptocurrency. Brian Quintenz, a commissioner for the US Commodity Futures Trading Commission, spoke in an address about the need for American cryptocurrency exchanges to self-regulate as well. U.S exchanges have taken heed to this advice.
The results of this decision will have a great impact on how the public views the world of cryptocurrency. If exchanges are able to self-regulate and lower theft, it would draw people in who previously were wary of the risk.
The question is: can the exchanges keep up?