current state of crypto regulation and exchange registrations were discussed in the fifth crypto study group meeting on Wednesday, September 12. The agency reveals that only three companies have survived the recent inspections out of 16, who have been allowed to operate crypto exchanges while their applications are being reviewed. From the 16 companies, one was rejected by the agency and 12 others have withdrawn their applications, while Coincheck, Lastroots, and Everybody’s Bitcoin are currently being reviewed.
Expansion of Crypto Team
Kiyotaka Sasaki, the vice commissioner for policy coordination FSA, said that ” The biggest problem is how to deal with new operators,” as reported by Reuters.
Sasaki further noted that currently, the agency has 30 personnel monitoring crypto exchanges and traders, reviewing registration applications and supervising unregistered operators. The FSA seeks additional help as over 160 companies want in on the market. The publication conveyed that the agency is requesting 12 more personnel in the financial year 2019 in order to swiftly respond to crypto exchange operators.
In addition, self-regulatory rules established by the Japan Virtual Currency Exchange Association (Jvcea) were also reviewed in the meeting. The long list of self-regulatory rules was explained to the attendees by the president of both the association and Money Partners, Impress Corporation reported.
One of the rules that govern the handling of cryptocurrencies at exchanges, states:
When handling a new virtual currency, after conducting an internal review by the member, it is necessary to notify the association beforehand, and if the association gives an objection, it will not be handled.
Currently, the members of the association are the 16 government-approved crypto exchanges: Money Partners,Bitflyer, Quoine, GMO Coin, Bitbank, SBI Virtual Currency, Btcbox,DMM Bitcoin, Bittrade, Tech Bureau, Bitpoint Japan, Bitgate, Bitocean, Fisco Virtual Currency, Bitarg Exchange Tokyo, and Xtheta.
Another rule concerning the management of customer assets states introduces “measures concerning margin trading using virtual currency” in compliance with the fund settlement law and the administrative guidelines. Although the leverage limit designated by the association is four times, the members can choose their own limit under certain circumstances. The association explains that the rule aims to “suppress the risk of loss of users and excessive speculative transactions in leverage transactions using virtual currency.”
Additionally, the exchanges are required to comply with anti-money laundering (AML) and combating the financing of terrorism (CFT) measures as well as rules regarding anti-social forces. The rules also outline the rules regarding basic transactions, dispute resolution, solicitation and advertising, ethics, trading guidelines, and how to handle initial coin offerings (ICOs).