While talks of a self-governing crypto organization had been in the air for quite some time, it is now official that the Japanese government has approved of a self-regulatory body that will administer the activities of 16 different crypto exchanges that currently exist within the nation.
To elaborate further on the matter, it is being reported that Japan’s national financial arm will work closely with the aforementioned agency to ensure that it stays in compliance with the existing Japanese financial laws and regulations .
In regards to the aforementioned news, it is worth noting that Japan’s Financial Services Agency (JFSA) has recently ascribed the Japan Virtual Currency Exchange Association (Jvcea) with the status of a self-regulatory organization (SRO). This has been done as per the existing economic rules of the nation (more specifically under the Japanese Payment Services Act).
In a recent interview with a respected crypto-media outlet, a spokesperson for the JFSA was quoted as saying:
“The SRO can take actions flexibly to keep up with the fast-changing environment surrounding crypto-assets. We think it necessary [for us] to work with the Jvcea closely so that the association can successfully perform self-regulatory functions through the establishment and application of self-regulatory rules and monitoring of their members.”
More On The Matter
It is being reported that the Jvcea will be working closely with the JFSA so as to ensure that all of the companies working under the SRO’s purview conduct their biz operations in a compliant manner.
This, as per the Jvcea, is being done in order to bolster the “safety and privacy of related systems” through investigation and research (on security) as well as to increase the overall awareness of exchange users.
If that wasn't enough, the association is also looking to map out a “detailed wallet management process” that is currently not covered by Japan’s existing regulations.
On this same point, a representative for the SRO stated:
“We expect that through self-regulation, clearer and more detailed rules will be provided as to provisions that are not specified under the existing laws/regulations, as well as self-discipline in areas that are not covered by the laws and regulations.”
How Will All of This Really Work?
To start off with, it can be seen that each and every one of Japan’s 16 registered cryptocurrency exchanges is currently affiliated with the Jvcea. In the future, companies whose applications are reviewed and approved by the Jvcea will also be able to join the association.
With that being said, the JFSA did release a circular recently wherein it was clearly stated that it was not a “legal compulsion” for any virtual currency exchange to become a member of the association before going live. However, a spokesperson then went on to add:
“However, from the perspective of user protection, the JFSA monitors whether virtual currency exchange service providers conduct their businesses appropriately, taking self-regulatory rules into account. In cooperation with the Jvcea, the JFSA has been monitoring virtual currency exchange service providers as to their compliance with self-regulation as well as the laws and regulations.”
Whether or not the Japanese FSA approves of another SRO in the future remains to be seen. However, as per Japan’s existing laws, there is technically “no limit” to the number of self regulating organizations that can be established within the country,
On the matter, the JFSA noted that incase another SRO wishes to gain its approval, that entity too will have to face “intense scrutiny.”