The Japanese Financial Services Authority (FSA) has delegated the powers to monitor and sanction the crypto industry to a group of 16 licensed crypto exchanges, which has been legally recognized as a self-regulatory body.
The group, also known as the Japan Virtual Currency Exchange Association (JVCEA), submitted an application to the FSA back in August to become a "certified dispute resolution business association." This self-regulatory body was formed from 16 officially licensed Japanese crypto platforms.
The organization declared its main goal to combat illegal activities in the industry, in accordance with strict rules and existing practices. The idea of creating JVCEA itself arose after the famous hacking of the Coincheck exchange, which led to the loss of $723 million.
In an effort to protect their own funds and the money of their clients, Japanese exchanges have joined the fight against insider trading and money laundering, creating security standards and internal guidelines for crypto exchanges.
The decision made by the FSA was long-awaited after a difficult a two-month assessment where the country's financial watchdog spent time "carefully examining the affairs of the Association and examining whether the group of companies can be expected to effectively manage the crypto industry." During the briefing, a senior FSA officer said:
This is a very fast-moving industry. It is better for experts to respond to changing situations in a timely manner, cutting out bureaucracy.
In a statement following the FSA's approval, the JVCEA assured the public that it would continue its efforts to create an industry that customers trust.
In parallel with the transfer of powers of internal regulation of the crypto industry to JVCEA, the state regulator FSA is considering a new taxation system that will ensure reporting and make it easier for taxpayers to calculate profits from cryptocurrency transactions.
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