Major hack in Japan has become a reason of considering a necessity to create a new entity that will regulate the cryptocurrency industry in the country.
It is reported that a group of sixteen Japanese cryptocurrency exchanges are planning to create a self-regulating body following the recent Coincheck hack when $533 million-worth NEM tokens were stolen.
An initial plan to merge two already existing groups – the Japan Cryptocurrency Business Association and Japan Blockchain Association – was declined due to the lack of understanding between these entities and their members. So, the exchanges voted for establishing a new organization to regulate exchanges registered with Japan’s Financial Services Association.
The goal of the new entity is to enforce self-imposed rules aimed at protecting exchange users’ assets, system downtimes, insider trading and even advertising issues. Moreover, the question of penalties for breaches will also be also under consideration. All this should lead to increasing the level of transparency in the cryptocurrency ecosystem as well as to enhance confidence from the side of traditional financial industry and wider audience.
It is extremely needed after a major hack of cryptocurrency exchange Coincheck, now considered to be the biggest cryptocurrency theft ever. Though the exchange confirmed that it will be refunding its 260,000 customers, traders’ confidence was undermined. Namely this attack caused taking up the questions over how Japan should regulate the industry.
The news about creation of a new self-regulating body has become known just after the announcement that the Financial Services Association will conduct on-site inspections at 15 unlicensed cryptocurrency exchanges after the above-mentioned high-profile theft. Nevertheless, there is still no information on the fact whether those exchanges under inspection are behind the new self-regulatory body, or whether Coincheck, that is also unlicensed, is a member of the founding group.
According to some sources, the new entity should start its functioning from April 1, a year to the day after Japan’s revised Payment Services Act was approved. This Act recognizes Bitcoin as a legal payment method and introduces a requirement for Japanese exchanges to register with the Financial Services Agency in order to obtain a special license to be eligible to operate in the country. Since September 2017, the Agency has granted certain crypto exchanges with licenses. Other exchanges, whose applications had not been approved, were allowed to continue to work only temporarily.
Previously, the Financial Services Association has ordered all exchanges in Japan to report on their security protocols and resistance to hacking in order to control the level of their safety.
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