An association of sixteen cryptocurrency exchanges licensed in Japan has formally requested the certification of the country's financial regulator to form a self-regulatory body.
The Japan Virtual Currency Exchange Association (JVCEA), a body comprised of 16 licensed cryptocurrency exchanges, seeks to become a "certified fund liquidation business association" after a formal request was filed with the Service Agency Financial (FSA), the main financial regulator of Japan.
The working group also seeks to collaborate with the authorities to create guidelines and legislation that, finally, allow the domestic cryptocurrency exchange sector to regulate itself, according to a note published in the Asia Times.
According to the report, the FSA certification process will undergo a rigorous two-month review in which the authority "will carefully examine the affairs of the Association and investigate if proper management of the group can be expected."
The JVCEA was formed in March, as a concentrated effort among authorized exchange operators to protect investors and restore confidence in the industry after a shocking hacking action that cost $ 530 million to the Tokyo-based Coincheck exchange. .
The group is now seeking certification to promote the cause, claiming that its recognition as a commercial fund liquidation association would help "the solid development of the virtual currency exchange industry and the protection of the interests of users."
JVCEA has already developed self-regulation rules in a 100-page draft, proposing measures such as prohibiting exchanges from backing privacy-centric currencies (Monero and Dash are notable examples) and applying a strict prohibition on insider trading. The industry group will have to obtain its certification before adopting and ordering those rules among member exchanges.
Less than two weeks 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 has no restrictions on borrowed trade (margin purchases).
The FSA of Japan has intensified its scrutiny in the domestic cryptocurrency exchange industry in recent months. In June, the regulator admonished six licensed exchange operators with commercial improvement orders, even going so far as to openly reject an application to register an exchange for the first time earlier that month.
Although it has not been confirmed, it is also rumored that the FSA will reconsider its existing regulatory framework for the sector. Specifically, the regulator is expected to try to apply to the industry the Law on the Exchange of Financial Instruments (FIEA), a measure that would bring the exchange of virtual currencies under the scope of the laws that govern traditional brokerage firms and securities firms. .
Source: CCN