Cryptocurrency in Japan has proven to be a rather interesting topic. While the government officially legalized this form of money, the country’s exchanges are trying to introduce more regulation in their own way. A group of 16 registered companies will create a self-regulatory body to generate more trust in this industry moving forward.
SELF-REGULATION IN THE CRYPTOCURRENCY WORLD
The cryptocurrency situation has unfolded in an interesting direction for Japan as of late. Although the country is one of the world’s first to officially recognize crypto as legal currency, there is a growing need for more regulation, even though it will not be introduced by the government itself, by the look of things. Instead, trading platforms themselves will focus on self-regulation for the time being. More specifically, 16 government-registered cryptocurrency exchanges will create this self-regulating body. It is expected that more companies will join this group later on, especially those whose applications with the government are currently being reviewed.
For the time being, there is no official word on which name this self-regulating body will receive or when it will go into effect. A tentative, albeit vague timeline of “spring 2018” has been floating around. The big question is how powerful this new body will be and what it will bring to the table.
It is commendable to see cryptocurrency exchanges focus on regulating themselves first and foremost, especially considering how things have been evolving recently. The recent Coincheck hack in Japan further highlights the need for some official “repercussions” for companies that lose customer funds for whatever reason. Additionally, a proper set of regulations may provide a safety net for customers who suffer due to such incidents.
As of right now, the Japanese government has not attempted to prevent any company from operating as a cryptocurrency exchange. That’s been somewhat of a surprise to a lot of people, especially given Coincheck’s recent issues. Even so, the company has repaid all of the affected customers out of its own pocket. This is in stark contrast to the Bitfinex exchange, which gave all users a “balance haircut” when the platform was breached a few years ago. This proactive approach by Coincheck may have helped it to remain operational after this hack.
For the time being, it remains to be seen what this self-regulatory body will entail exactly. More information on this topic should be made available in the near future. It is a positive approach overall, as these exchanges know best what needs to happen in order to protect customers at all times.