An association of sixteen licensed domestic cryptocurrency exchanges in Japan have formally applied for certification from the country’s financial regulator to form a self-regulatory body.
The Japan Virtual Currency Exchange Association (JVCEA), a body comprised of all 16 licensed cryptocurrency exchanges, is looking to become a “certified fund settlement business association” after a formal application submitted with the Financial Services Agency (FSA), Japan’s primary financial regulator.
The working group is also looking toward working with authorities to create guidelines and legislation to ultimately allow the domestic cryptocurrency exchange sector regulate itself, the Asia Times reported.
According to the report, the FSA certification process will go through a rigorous two-month review wherein the authority will “carefully examine the affairs of the Association and investigate whether proper group management can be expected.”
The JVCEA was formed in March, as reported by CCN.com at the time, launched as a concentrated effort among licensed exchange operators to safeguard investors and regain confidence in the industry in the aftermath of a seismic $530 million hack of Tokyo-based exchange Coincheck.
The group is now seeking certification to further the cause, claiming its recognition as a fund settlement business association would help “the sound development of the virtual currency exchange industry and the protection of interests of users.”
The JVCEA has already drawn up self-regulatory rules in a 100-page draft, proposing measures such as prohibiting exchanges from supporting privacy-centric coins – Monero and Dash are notable examples – and enforcing a strict ban on insider trading. The industry group will need to earn its certification before adopting and mandating those rules among member exchanges.
Less than a fortnight ago, the association also proposed a plan to impose a 4-to-1 cap on margin trading to limit the risk of losses in a market that currently sees no restricts on borrowed trading.
Japan’s FSA has ramped up its scrutiny into the domestic crypto exchange industry in recent months. In June, the regulator slapped six licensed exchange operators with business improvement orders while going so far as to outright reject an application to register an exchange for the first time earlier that month.
While unconfirmed, the FSA is also rumored to be re-considering its existing regulatory framework for the sector. Specifically, the regulator is reportedly looking to regulate the industry under the Financial Instruments and Exchange Act (FIEA), a move which would bring crypto exchanges under the purview of laws applicable to traditional stock brokerages and securities firms.
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