Crypto Industry Self-Regulation: Possibility or Nonsense? (Japan test)

Since 2018, the Japan Virtual Currency Exchange Association (JVCEA), a self-regulatory body, has been tasked with developing regulations for the cryptocurrency industry in Japan. At the time, some argued that the organization might be better equipped (technically) than a government agency to handle cryptocurrency regulation.

As a reaction to the $530 million CoinCheck exchange hack in 2018, the group was created. It is authorized to promulgate and implement regulatory frameworks for regional cryptocurrency exchanges and is recognized by the Financial Services Agency of Japan (FSA).

Many well-known local cryptocurrency companies, such as CoinCheck, BitFlyer and Rakuten Wallet Co, as well as the Japanese subsidiaries of FTX and Coinbaseaccountable among its members.

Self-regulation seems ineffective…

Local government officials and business players say Japan’s experiment with self-regulation for the cryptocurrency industry is not working as expected.

A source close to business and government said in an interview with the Financial Times (FT) that the current cryptocurrency regulatory framework is failing.

… or is it Japan that lacks the will?

Another person close to the JVCEA said that the group lacks employees who have a genuine interest or expertise in crypto.

Sources familiar with the matter have suggested that the JVCEA lacks employees with real knowledge of crypto and is instead made up of former bankers, brokers and government employees.

They claim that the board is mostly made up of retired bankers, courtiers, and government employees and that the list of crypto companies that are members of the JVCEA is not really represented there.

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