Japan’s top financial regulator, Financial Services Agency (FSA), revealed its expectations on self-regulation of Japanese cryptocurrency exchanges. All 16 regulated crypto exchanges in Japan are members of this self-regulatory organization (SRO).
Japan’s FSA and Self-Regulatory Organization Collaboration
The Japan Financial Services Agency explained that it believes that “this SRO can act flexibly to keep up with the rapidly changing environment surrounding crypto assets.”
“We believe that it is necessary for us to work closely with JVCEA. It can successfully perform self-regulatory functions by establishing and applying self-regulatory rules and overseeing its members.”
The association will work with the FSA to direct and supervise its members to “operate properly”. It is expected that the two sides will cooperate to improve the security of related systems through investigating and researching on security issues, and “spreading information to improve the awareness of users”.
All 16 cryptocurrency exchanges registered in the FSA in Japan are members of JVCEA. Initially, only registered exchanges can join the association. However, after obtaining the SRO status, the association opened its membership to other cryptocurrency operators. According to local media reports, companies identified as cryptocurrency brokers (these companies are permitted to operate cryptocurrency transactions during the FSA review of their exchange applications) can also join the association.
The FSA confirmed that “virtual currency exchange service providers become members of a self-regulatory organization and are not legal obligations. “However, from a user protection perspective, FSA will consider self-regulatory rules to monitor whether virtual currency exchange service providers are doing business properly.” In other words, even if cryptocurrency exchanges are not members of Jvcea, they should Adhere to self-regulation standards.
As for whether the FSA will approve another self-regulatory body, the agency stated that “the number of SROs is not limited by law/regulation.”