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Japan Discloses Expectations for Cryptocurrency Industry Self-Regulation

Alan Muli

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Japan’s top financial regulator revealed its expectations for the self-regulation of cryptocurrency exchanges in Japan. All 16 regulated crypto exchanges in Japan are members of this self-regulatory organization, which was approved by the agency and is working closely with them to ensure compliance.

 Working Together

The country’s top financial regulator, Japan’s Financial Services Agency (JFSA), has granted the Japan Virtual Currency Exchange Association (JVCEA) self-regulatory organization (SRO) status under the payment services act.

The JFSA believes that self-regulation can take action flexibly to keep up with the fast changing environment surrounding crypto-assets. The agency remarked, “We think it is necessary for us to work closely with the JVCEA. This will enable the association to successfully perform self-regulatory functions through the establishment and application of rules and monitoring of their members.”

The association is expected to cooperate with the JFSA to supervise and instruct its members to operate their businesses appropriately. The cooperation is also aimed at improving the safety of related systems through investigation and research on security. More so, the association is expected to set out detailed wallet management processes from the system security point of view in areas that are not covered by the laws or regulations.

Initially only registered exchanges could join the association. However, the association opened up membership to other crypto operators after it was granted SRO status. According to local media, companies that have been allowed to operate while their applications are being reviewed by the JFSA can also join the association.

The JFSA confirmed that it is not a legal obligation for virtual currency exchange service providers to be a member of a self-regulatory organization. However, crypto exchanges are expected to uphold self-regulatory standards even if they are not members. Furthermore, the agency revealed that it will work closely with the association. The cooperation is expected to enable exchange of views on various issues, sharing of member information, unregistered business providers and user complaints.

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