FSA Approval Gives Industry Self-Regulatory Status
The Financial Services Agency (FSA) of Japan granted the Virtual Currency Exchange Association rights to police and sanction exchanges. This effectively gives the cryptocurrency industry a self-regulatory status. The government is very careful when it comes to deciding its approach towards the crypto industry. This is due to large-scale thefts and frauds that continue to hit the virtual currency world. Even big IT companies like Google are taking a conservative approach to allowing crypto-related ads. Recently the company partially lifted the cryptocurrency ban that it imposed at the start of this year. However, Google will allow advertisements only from the regulated cryptocurrency exchanges.
The approval from FSA provides the industry association the rights to form a set of regulations and rules for safeguarding the customer assets, give operational guidelines, and prevent money laundering. The association will also comply with the law. According to a senior FSA official, virtual currency is a fast moving industry. Because of this, experts come up with rules in a more timely manner than the bureaucrats.
In its statement following the approval from FSA, the cryptocurrency industry association said, “We will make further efforts to build an industry that is trusted by customers.” Japan has a reputation of encouraging technological innovations while keeping an eye on consumer experience. Last year Japan became the first nation in the world to come up with cryptocurrency exchanges regulations. As per the rule, it will be mandatory for all the exchanges to register with FSA.
Japan’s careful approach is understandable after the regulator received criticism when hackers stole around $60 million from Tech Bureau Corp. Prior to that FSA slapped the company with two business improvement orders after fraudsters stole $530 million worth digital coins from Coincheck, a Tokyo-based cryptocurrency exchange operating under the exemption for a license.
The hack unveiled the gaps in the regulation policy, especially regarding cybersecurity and illustrated the lawmakers how difficult it is to keep tabs on the rapidly changing crypto industry. Apart from Japan, other countries faced such issues. The commissioner for the US Commodity Futures Trading Commission, Brian Quintenz, stated that following the example of Japan, the US cryptocurrency exchanges too must think about self-regulation.
FSA will have to battle with work overload
According to some officials of FSA, the cryptocurrency world requires heavier regulatory approach. The senior partners at Atsumi & Sakai law firm, Yuri Suzuki stated that the self-regulatory body has stricter rules as compared to the existing law. She believes that it will help the crypto industry regain the trust of the public.
Suzuki further added that it also indicates that the workload of the self-regulatory body will increase and may pose an issue when it comes to having an adequate, skilled manpower to execute the task with expertise.