Japan’s Financial Services Agency (FSA) has approved self-regulatory status for its cryptocurrency market. This gives the Japan Virtual Currency Exchange Association (JVCEA) authority to monitor the sector, implementing rules where required. The association is a union of 16 Japanese licensed exchanges, which have collaborated to protect investors and their assets.
JVCEA has authority to implement operational guidelines and regulations, which Japanese exchanges and firms must follow when trading digital-assets. The regulations are to prevent any users from carrying out illegal activities such as money laundering, which is a recurring issue within cryptocurrency. Any firms that violate these set guidelines will face punishment by the JVCEA.
Prior to the self-regulation policy, $540m worth of cryptocurrencies were stolen in Japan in the first six months of 2018, according to cointelegraph.
Japan is leading the way in regulating the global crypto-space by delegating the responsibility only to licensed firms. The FSA will not be regulating the space itself, but determines who in the sector can contribute to the self-regulation through licensing. In September last year, Japan-based Quoine was the first global crypto exchange to be licensed by the country’s FSA. Since then, the FSA has had to expand its personnel to handle the volume of licensing applications it receives.