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News from Japan: Japan’s Licensed Crypto-exchanges Formally Apply for Self-regulatory Body

08/24/2018
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  • Crypto news
  • cryptocurrency
  • regulations
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The latest news from Japan claims that Japan has finally become a country with a formal certification from a country’s chief financial institution for the Japanese crypto-exchanges. This is a revolutionary step in the crypto-world since cryptocurrencies have been for a long time facing skepticism in terms of official recognition as financial instruments.

The first steps for certification were taken in April 2018 when 16 licensed Japanese crypto-traders applied to the FSA with a bid to form an association regulating cryptocurrency exchanges in Japan.

Self-Regulatory Bitcoin Japan Exchange: JVCEA

JVCEA is an abbreviation for the Japanese Cryptocurrency Exchange Association including 16 top cryptocurrency exchanges in Japan. In April 2018, the JVCEA actually came into existence for the sake of introducing a solid regulatory framework for the market of cryptocurrency in Japan. The initiative emerged shortly in the aftermath of the Concheck hack that caused a loss of over half a billion worth in NEM tokens among Japanese and foreign clients. Such lawlessness and absence of regulation urged the crypto-investors to seek more formal mechanisms to regulate and protect their assets and activities.

The organization is headed by Taizen Okuyama, the CEO of Money Partners. Within the area of JVCEA’s planned regulatory matters for Japan’s cryptocurrency market, Okuyama is expected to establish working partnerships with the significant Japanese cryptocurrency trading platforms and institutions. The initial actions were taken by Okuyama in April already suggest that the strongest focus of the organization will be on the Japan Bitcoin exchange regulation.

How Will It Affect the Japan Bitcoin Exchange?

As the creation of an officially certified body regulating cryptocurrency exchange in Japan suggests, security of traders and customers is still a serious concern in the crypto-world. Hence, there is a need for more stringent controls and improvement of public confidence in the market. JVCEA announced the launch of initiatives aimed at ensuring safety procedures and in-house controls across the Japanese crypto-exchanges, as well as a focus on best practice and compliance standards creation for all members of the market to keep to.

How Will Traders Now Exchange Bitcoin in Japan?

While the Japan crypto-news continue buzzing about the creation of JVCEA and its official recognition by the FSA, the entity already makes serious steps towards establishing a proper regulatory environment in the cryptocurrency market in the country. For instance, it became known that the JVCEA offered to establish limits for some users’ trading volumes in late July, and also suggested that the 1:4 limit for a leverage level in margin trading should be imposed. This step is meant to reduce the risks of dramatic asset losses since at present, the currency trading market has very loose regulations on borrowed trading.

Other measures imposed by the JVCEA in the framework of its regulatory innovations include:

  • Planned prohibition on trading practices for coins fostering total privacy of clientele as potentially hazardous and unregulated currencies.
  • A strict ban on insider trading practices.
  • Mandatory certification before adopting the JVCEA rules and starting the work as a member exchange.

Though there is still much unclear on the subject of whether the FSA will give the JVCEA an official status or not, as the review of the application will take over two more months, the move is already a positive one for the crypto-market on the one hand, as it will gain more customer confidence and a better, more transparent regulatory framework. On the other hand, traders expecting privacy and confidentiality in this arena will have to reconsider their approach to crypto-trading, as in case the JVCEA is recognized by the FSA, this business will become subordinate to the Financial Instruments and Exchange Act similar to the market of stock and securities exchanges.

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