One of the countries that has allowed the crypto market to grow and prosper in Japan. With widespread adoption among its citizens, Japan is a prime example of how cryptocurrencies can benefit modern society. However, there were also some issues that Japan have to deal with. One of which is the proliferation of hacking incidents in the country.
For instance, Coincheck lost around $500 million from theft. And for this reason, regulators also need to come up with ways on how to prevent such incident from happening. Regulators decided to change regulations that pertain to crypto exchanges. Though it has been welcomed by some exchanges, Kraken opted to move out of Japan.
On Wednesday, Japan’s Financial Services Agency gave the crypto market a self-regulatory status. Japan Virtual Currency Exchange Association is now the one in charge of looking after exchanges. The FSA approval is big news for the industry since it gives the association the rights to set rules pertaining to keeping the assets of their clients safe and to prevent money laundering operations.
Other than the rules and regulations that are set by the association, the association also need to look after the compliance in the industry. According to senior FSA official, “It’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do”.
Japan is open-minded when it comes to handling cryptocurrencies. Could they be correct in their approach this time? In fact, a few months ago, the association also suggested of having a unified regulatory approach for the industry. The FSA official added that “We will make further efforts to build an industry that is trusted by customers”.
Regulations on Exchanges
With concerns over hacking incidents, Japan became the first country that regulated crypto exchanges. It encouraged both tech innovation and consumer protection by having exchanges register with the agency. However, in September, around $60 million were stolen from Tech Bureau Corp which is a crypto company. Before the incident, there were two business improvement orders from the FSA.
But despite the precautions, the incident still happened. According to FSA officials, the crypto industry needs heavier regulatory while not stopping growth in the process.
Regaining Public Trust
For Yuki Suzuki who works as a senior partner at law firm Atsumi & Sakai, he believes that this step could be able to regain public trust. He also added that “the self regulatory body’s workload is likely to be heavy and there is an issue of whether it can secure enough staff with expertise in crypto exchange business”.
The FSA prepared the guidelines for the different crypto exchanges planning to enter the country. There are already 160 companies that expressed their interest. In fact, this isn’t really surprising. Japan is among the leading countries in terms of crypto activity.
So far, there are 16 approved cryptocurrency exchanges. And because of the strict guidelines, FSA hasn’t granted new approval yet since last December. FSA official said that “We are looking into more details than before. In that sense, the approval process has become more strict”.
Given this new move, does it mean that it can prevent hacking incidents from taking place? Or will it become more difficult for crypto exchanges to enter the market?