Japan’s FSA certifies local crypto industry as self-regulating
Japan's exchanges get a now-self-administered stamp of approval.
Japan's Financial Services Agency (FSA) has granted its local cryptocurrency industry, whose most prominent representatives are probably the many local exchanges, a certified self-regulatory status, Cointelegraph Japan reports.
The FSA has essentially passed the carrot and stick to the Japanese Virtual Currency Exchange Association (JVCEA) to allow it to oversee the space.
It comes with a range of expectations and obligations, requiring the JVCEA to set adequate rules for the protection of its customers' assets, to implement an effective anti-money laundering policy and to give ongoing guidance to cryptocurrency exchanges based in Japan to better help them meet the standards expected of them under the JVCEA.
The self-regulation starts now, and the obligations are effective immediately, with a new series of clear rules arriving on the JVCEA site.
It comes after previous inspections have turned up some shocking results within the industry, including exchanges failing to adequately segregate exchange and customer funds, and in one case, exchange staff even using customer money for personal use.
At the same time, Japan's exchanges in particular have a penchant for being hit hard and frequently, and above all expensively, by a combination of sophisticated cyber-attackers and lax internal security standards.
Late last month the Zaif exchange lost $60 million of mostly customer funds after keeping it in a hot wallet while exchange staff went home for the weekend. And before that, the monumental half billion dollar Coincheck heist, which is still the crypto industry's largest to date, similarly drained a hot wallet.
In both cases the exchanges seem to have shrugged the losses off with surprising ease, although the JVCEA has implemented stricter guidelines for exchange hot wallet usage.
The history of hack attacks might have self-regulation raising some eyebrows, but an FSA official speaking to Reuters pointed out that it's a fast-moving industry and one might expect better results from industry experts making snappier decisions when needed, rather than waiting for the wheels of bureaucracy to turn.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VET, XLM, BTC and ADA.
- Libra has no intention of competing with any sovereign currencies, lead says
- Treasury Secretary Mnuchin: We are concerned by Bitcoin’s speculative nature
- Blockchain ID system coming to Korea by 2020
- Bitcoin falls below $10,000 again, takes ETH and XRP with it
- Tether accidentally prints $5 billion USDT in “token decimals” issue