The Financial Services Agency (JFSA) suggests Japan Virtual Currency Exchange Association (JVCEA)’s new self-regulatory organization (SRO) status allows it to take actions more flexibly in order to keep up with the fast-changing crypto asset environment. JFSA says: “We think it is 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.” The association is expected to cooperate with JFSA to instruct and supervise its members to “operate their businesses appropriately,” while helping them “to improve the safety of related systems through investigation and research on security” and disseminate “information externally to increase the awareness of exchange users,” the agency described.
JFSA, according to the Payment Service Act, awarded JVCEA the SRO status. SRO is a non-governmental organization that has the power to create and enforce industry regulations and standards. The priority is to protect investors by establishing rules that promote ethics and equality.
Furthermore, the association is expected to “set out detailed wallet management processes from the system security point of view and the cross-sector rules in areas that are not covered by the laws/regulations, for example, margin trading, for the users’ protection,” Japan’s top financial regulator noted. The agency further elaborated: “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.” The agency emphasizing: “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.”
JFSA has approved a self-regulatory organization, which it is working closely with to ensure compliance. All 16 regulated crypto exchanges in Japan are members of this self-regulatory organization. JFSA hoped that through self-regulation, clearer and more detailed rules can be drawn up in areas not regulated by current laws and regulations. Being a member of the Japan digital currency exchange association is not a legal obligation for digital currency exchanges. From the perspective of user protection, the JFSA will consider self-regulatory rules to monitor whether digital currency exchanges are operating properly. Digital currency market regulation policies of various countries are in compliance with those of the United States, and Japan’s regulation is getting more completed and ready.