Two trade groups in Japan’s cryptocurrency industry have agreed to form an as-of-yet unnamed organization next month that will self regulate the local crypto market in conjunction with Japan’s Financial Services Agency (FSA), local news outlet Nikkei Asian Review reports Saturday, March 3.
This cooperation in the Japanese crypto sphere comes after January’s hack of the Japanese-based crypto exchange Coincheck, with losses totalling more than $534 mln in NEM, the largest hack in the crypto world since Mt. Gox. The hack, which was caused by a breach of a low security hot wallet storing NEM, prompted the FSA to conduct security measure inspections on 15 unregistered crypto exchanges, including Coincheck.
The trade groups looking to self-regulate, one of which is the Japan Cryptocurrency Business Association (JCBA), represent 16 registered crypto market operators. The market operators will reportedly work together to produce industry-wide investor safety standards, including the creation of guidelines for Initial Coin Offerings (ICO). The Nikkei Asian review writes that the group will be able to require compliance of its members, similar to the powers held by the Japan Securities Dealers Association.
Taizen Okuyama, president of foreign exchange trading platform Money Partners Group, as well as chair of the JCBA, will serve as chairman of the new organization. Okuyama told the Nikkei Asian Review that the aim of this new organization is to “bring the entire cryptocurrency sector to bear on self-regulation.”
If the new group is approved as an independent regulatory body by the government, the organization will be able to prohibit certain virtual currencies from being used by registered crypto operators in the country if, for example, the coins are suspected of being used in money laundering, the Nikkei Asian Review reports. While waiting for FSA approval, the new regulatory body will be provisionally open to registered operators and exchanges.
In mid-February, seven large cryptocurrencies companies joined together to create CryptoUK, the first trade organization that will self-regulate the crypto market within the United Kingdom.