Crypto Exchange Body In Japan Seeks Official Recognition

News, Regulation | August 8, 2018 By:

Japan’s Virtual Currency Exchange Association (JVCEA), an association of 16 licensed domestic crypto exchanges, has formally applied for a license from the country’s Financial Services Agency (FCA) to form a self-regulatory body.

The JVCEA, which was formed earlier this year following the Coincheck hack, said the license would grant the association the title of “certified fund settlement business association,” which will enable them to legally contribute “to the sound development of the virtual currency exchange industry and the protection of the interests of users.” It would also allow them to act as the self-regulatory body for Japan’s cryptocurrency exchange industry by providing “guidance and recommendations to members in order for them to comply with regulations, laws and self-regulation rules.”

The JVCEA has reportedly submitted a detailed 100-page document of its proposed self-regulatory measures to the FSA. The proposed measures include prohibiting exchanges from supporting privacy-centric coins, such as Monero and Zcash, and enforcing a strict ban on insider trading. It also proposed a limit on the maximum leverage offered by exchanges for margin trading.

According to the To-O Nippo Press, the certification process will have to go through a two-month review by the FSA, which will “carefully examine the affairs of the association and investigate whether proper group management can be expected.”

Following the Coincheck hack in January of this year, the FSA introduced tighter regulations for local crypto exchanges, including developing and implementing improved data security measures. In June, the regulator issued business improvement orders to six licensed exchange operators, and rejected a registration application from crypto exchange quasi-operator FSHO. The regulator labelled FSHO a “corporation that has not established a system to properly and reliably carry out services in the virtual currency exchange industry.”