Huge positive news coming out of Japan today. The crypto industry has been given self-regulatory status by the Financial Services Agency (FSA).
The authorities reckon that the industry itself is based placed to devise and police the rules and compliance policing with the laws – the Japan Virtual Currency Exchange Association will now assume those responsibilities and powers.
Exchanges in Japan must be registered with the authorities and includes a licensing regime.
Nevertheless, exchanges have still been hacked. Most spectacularly, in January this year Coincheck “lost” what was $530 million worth of XEM tokens of NEM.
In March the FSA issued punishments to several licensed exchanges including Coincheck, and has intervened with notices to force improvements in business operations.
“It’s a very fast moving industry. It’s better for experts to make rules in a timely manner than bureaucrats do,” said an FSA spokesperson in comments to Reuters.
“We will make further efforts to build an industry that is trusted by customers,” an association representative added.
Japan has the most advanced regulatory regime for crypto and arguably the most accommodating of the G7 countries. Bitcoin is legal tender in Japan which is the second-largest market for crypto trading after the US.
Good news discounted by market
Not surprisingly in the current environment, the good news hasn’t moved the price. Lack of regulatory clarity is considered to be one of the factors holding back crypto adoption.
The muted response so far from the market perhaps reflects the lack of momentum money from retail investors at play, as more sophisticated investors bide their time.
Rather, steady accumulation seems to be the name of the game, but still with plenty of sellers appearing as soon as the bitcoin price gets north of $6,600.
Others to follow Japan?
But looking past price movements, the Japanese decision could have implications beyond the country. If it is a success then it could prove to be a template for other countries to follow.
India has taken a decidedly anti-crypto approach to regulation, with an exchange founder recently arrested for setting up a bitcoin ATM.