In a landmark decision, the Japanese FSA has chosen to give the crypto industry self-regulatory powers. This comes as a shock to many, considering how tightly the FSA’s grip on the industry was— there was often a sentiment shared by fans of the market that Japan’s regulatory body was stifling cryptocurrency by limiting its reach since the NEM hack, which resulted in a loss of $530 million. The ability for cryptocurrency to self-regulate should give members of Japan hope as it could mark a significant shift towards more sensible decisions regarding the security and safeguarding of the asset class.
What does it mean for cryptocurrency to self-regulate?
The FSA has effectively made the Japan Virtual Currency Exchange Association in charge of cryptocurrency decisions, therefore making the industry self-regulatory. The Japan Virtual Currency Exchange Association have been asking for this responsibility since as early as August 2, 2018. The JVCEA can now approach exchanges and order sanctions if they wish, among other policing powers. In a statement, an unnamed FSA official noted that “It’s a very fast-moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do“.
It is hard to say what rules will be made or enforced now, seeing as it is possible for cryptocurrency to self-regulate, but Yuri Suzuki, a senior partner at the law firm Atsumi & Sakai said that “the self-regulatory body’s workload is likely to be heavy and there is an issue of whether it can secure enough staff with expertise in crypto exchange business.” This could lead to stricter rules than when the FSA was making decisions.
Did bureaucratic regulation fail?
With this sudden change in mind, it is worth asking whether the FSA’s ability to try and control cryptocurrency was at all a success. Since the Coincheck NEM theft, the regulations which were pushed often seemed harsh. In the middle of 2018, it was a regular occurrence to come across news about tighter controls, forced amendments to exchanges, and even the possibility of restricting the use of privacy coins. The FSA had been focusing on rigidly restricting cryptocurrency for a while, but word from officials appear to suggest that those moves were not as useful as anticipated. Hopefully, the decision for cryptocurrency to self-regulate brings stability to the market and allows for more sensible rules to be enacted.
Kai is a cryptocurrency copywriter and professional trader. He can often be found investigating various cryptocurrencies, whitepapers, and blockchain technologies. Kai has been a professional writer for 5+ years, and has invested in 50+ different coins and tokens. He also currently studies Law and Philosophy at university.