A new self-regulatory body will start policing Japan’s cryptocurrency market next month as it works at bolstering trader confidence following the Coincheck hack.
In a report from the Asian Nikkei Review, two trade groups representing 16 registered digital currency operators will work with the country’s financial watchdog, the Financial Services Agency (FSA), to create standards for trader safety. Guidelines will also be established for initial coin offerings (ICOs).
According to the report, even though a name for the organisation has yet to be determined, it’s expected that it will become operational in April. Taizen Okuyama, who will serve as chairman, said that the aim is to ‘bring the entire cryptocurrency sector to bear on self-regulation.’
The creation of the self-regulating body comes after the hack at Japanese cryptocurrency exchange Coincheck at the end of January. At the time, hackers were able to steal $530 million worth of XEM, the token for the NEM platform, making it the biggest theft of its kind. As a result, it highlighted security concerns within Japanese cryptocurrency exchanges, with the FSA calling for onsite inspections at them all.
Prior to the hack, last April saw Japan become the first country to oversea cryptocurrency exchanges at the national level. However, as well as the 16 registered exchanges, authorities permitted a further 16 unregistered exchanges, including Coincheck, to continue operating while their applications were being reviewed. Naturally, this has put the spotlight on Japan with concerns being raised that it has been too eager to embrace the sector.
Not only that, but a system glitch at Japanese cryptocurrency exchange Zaif put the market further into the limelight last month. Seven investors were able to purchase bitcoin for free during a 20-minute period, although none were able to profit from it. Notably, Zaif is one of the registered exchanges, so this may create further concern that more checks should be conducted at registered exchanges as well.
Since the Coincheck hack it has been faced with several class action lawsuits from disgruntled investors after the exchange froze their assets. The exchange has said that it will reimburse 260,000 of its customers.
Last month, seven U.S. and European cryptocurrency companies, including Coinbase and eToro, created a British trade body known as CryptoUK. The aim is to establish a code of conduct that promotes a healthy trading environment, the Asian Nikkei Review said.
Featured image from Shutterstock.
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