The Japan Virtual Currency Exchanges Association (JVCEA), a group created in April 2018 by cryptocurrency exchange operators in Japan to bring clarity to the industry has achieved a new milestone.
According to an interview reported by Bitcoin.com, the JVCEA is now officially recognized by Japan’s Financial Services Agency (JFSA) as a self-regulatory organization (SRO) to detect the activity of cryptocurrency exchanges operating in the country.
The new status means that the JVCEA will ensure that the 16 member exchanges that currently belong to the group will operate their businesses in the right way by improving their safety systems and meeting up with other regulatory requirements stipulated.
However, the JFSA remains the highest financial regulatory body in Japan and will still collaborate with the JVCEA to ensure that the standards required of crypto exchange operators are met.
The JFSA said in the report,
“We think it 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.”
One of the tasks set before the JVCEA following their new status is to create “detailed wallet management processes” for some areas not covered by existing laws for crypto exchanges. The JFSA outlines “margin trading” on the exchanges as an example of a process which the new SRO will create a regulation to govern it. Additionally, any law formed by the JVCEA in this respect will remain to bind on the member exchanges since they are the ones to take part in the decision-making.
The new organization was also encouraged by the JFSA to use its status as an SRO to take actions that will make member exchanges to adapt quickly with changing demands of the industry.
In the future, the JFSA says it will accept and review new applications submitted by other groups to exist as a self-regulatory organization.
“If another SRO submits an application for approval, the JFSA will scrutinize it from the viewpoint of the applicant’s effectiveness in performing self-regulatory functions.” the regulators said in the announcement.
Japan’s decision to allow cryptocurrency exchanges to regulate themselves mean that the region has once again proven to be a crypto-friendly one. We reported earlier that the JFSA replaced the term virtual currencies with crypto-assets to avoid confusion among citizens about what the new asset class legally stands for.
Also in the last month, authorities in the country disclosed that they would slightly amend existing regulations to make sure that those who make money from cryptocurrencies pay required taxes