Japan is getting stricter on cryptocurrency exchanges as the country’s self-regulatory body Crypto Exchange Association proposes new rules that ban insider trading, trading highly anonymous coins like Monero, Dash, and others while focusing on customer protection. Meanwhile, the watchdog, FSA has decided to issue improvement orders to five crypto exchanges viz. bitFlyer, Quoine, Bitbank, BtcBox, and BITPoint Japan.
FSA: Improvement orders to 5 registered exchanges
Japan is taking further cautionary steps towards cryptocurrency in a broader way. In one scenario the Financial Services Agency (FSA) of the country is going to issue business improvement orders to over five crypto exchanges. The agency conducted inspections and concluded that these registered exchanges have flaws like lack of appropriate money laundering measures in their internal management systems. According to the local media sources, due to this reason, FSA now intends to issue improvement orders by this weekend.
The exchanges so targeted are bitFlyer, Quoine, Bitbank, BtcBox, and BITPoint Japan. As the client deposits of exchanges grow, FSA is going tougher on crypto exchanges. Apart from FSA, the self-regulated body of Japan’s crypto industry, Crypto Exchange Association has drafted new regulations. Drawing about 100 pages of self-regulatory measures, an official from an exchange clarifies:
“We’re being subjected to rules almost as tough as the Financial Instruments and Exchange Act.”
Anonymous coins, insider trading & customer protection
As per these regulations, insider trading and trading of anonymous virtual currencies will be prohibited. These practices are proposed to improve the transparency and consumer protection in the crypto market. Established in March, the association will be voting on the proposal on June 27 in a meeting. The rules are planned to be adopted as soon as the association gets recognized as a self-regulatory body by the country’s watchdog.
Insider trading has been explicitly banned by the proposed rules. Moreover, the local media channel points out that coins with high anonymity like Monero, Dash, and GCash could be “forced out of the mainstream.” The rules would be prohibiting exchanges from accepting these cryptocurrencies that cannot be traced back to their sellers, hence can be used easily for money laundering. Furthermore, customer protection plays an important role as crypto exchanges will be required to report audit results. In order to minimize the hacking risk, the private keys of customers must be managed offline.
Exchanges will be further required to have circuit breakers so that trading can be stopped in case of any sudden plunge or surge in a crypto price. Also, the quoted rates should be kept from being deviated widely from the market rates at a particular time.
Initially, the agency refrained from being too harsh on the nascent industry in its effort to promote growth. However, Coincheck hack of over $500 million worth of NEM coins led the agency to impose stricter regulations.
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