Japan’s newly created cryptocurrency association has drafted new rules that aim to prevent insider trading and the trading of crypto assets that can’t be traced as it steps up consumer protection efforts.
New Rules to Be Adopted
The Japan Virtual Currency Exchange Association was created in March. The aim of it is to address investors’ concerns over transactions. It also wants to rebuild trust following the Tokyo-based Coincheck hack in January.
According to a report from the Nikkei Asian Review, the association is to vote on the new regulations on June 27th.
As soon as it is recognised as a self-regulatory body by Japan’s financial watchdog, the Financial Services Agency (FSA), it will be seeking to adopt the rules.
With the new regulations adopted, insider trading will be banned, which could be used to boost a currency’s value, giving rise to market speculation. The trading of crypto assets that are hard to trace will also be forced out. These include the likes of Monero, Dash, and GCash.
Coincheck Hack Changes Things
Prior to the Coincheck hack, Japan’s cryptocurrency industry was considered a crypto-friendly environment. Last April, legislation passed that saw Bitcoin becoming a legal form of payment. And in a bid to promote the sector’s growth, the FSA didn’t impose strict rules.
That all changed, however, at the end of January. Coincheck, the Tokyo-based crypto exchange, was the victim of a hack, with thieves siphoning off $530 million worth of NEM.
Following the loss of customers’ assets, the FSA realized that stronger regulation was needed. Onsite inspections of the country’s digital currency exchanges were undertaken. These were to determine what measures, if any, the operators had in place to ensure people’s money was safe from the threat of a hack.
Initially, there were 32 digital currency exchanges in Japan, 16 of which were registered with the FSA. Notably, while the remaining 16 were waiting to receive approval from the regulator, they were permitted to continue operating. Coincheck was one of the exchanges waiting to become registered.
Since the hack, the number of exchanges that are not registered has dwindled. Raimu, bitExpress, Bit Station, Tokyo GateWay, and Fukuoka-based Mr. Exchange are just a few that have voluntarily withdrawn their applications. More recently, the application of Yokohama-based exchange FSHO was the first to be denied by the FSA.
The market may have experienced a great blow, but it’s hoped that these measures will be the first steps to ensuring protective measures will be in place for future threats.
Do you think Japan’s crypto industry will become stronger with the new regulations? Let us know in the comments below.
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