The Japan Virtual Currency Exchange Association (JVCEA) is a self-regulating body comprised of the sixteen licensed crypto-exchanges operating in the country. It was established on March 29th to develop guidelines for the industry and help reinstate confidence after Coincheck’s $534 million hack caused concern amongst investors.
The organization now plans to vote on proposals to block insider trading and ban anonymous tokens like Monero (XMR) that have recently been used for illegal activities such as cryptojacking. The proposals include almost 100 pages of rules outlining ways in which exchanges can use coins and measures to control trading.
The Japanese Financial Services Agency (FSA) has previously been vocal in their desire for exchanges to stop supporting privacy coins due to their potential for money-laundering and other criminal use. CEO of crypto exchange Monex, Taizen Okuyama, stated that the JVCEA group is working hard to improve security and eliminate concerns that have rattled customer confidence.
All 16 members of the group will be required to provide internal audit reports and introduce new measures such as ‘circuit breakers’ to freeze trading during spikes. Offline private-key storage is another key requirement, considering that Coincheck’s theft this January was achieved in part due to tokens being stored online in hot wallets.
The new legislation has drawn some criticism, with one exchange claiming they are now subject to rules similar to those the Financial Instruments and Exchange Act impose. Implications of such could involve vastly increased compliance costs for crypto exchanges.
The JVCEA will vote in one week from now but can only adopt the laws once the FSA has granted them self-regulatory status.
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