japan

Japanese Exchanges to Prohibit Insider Trading and Privacy Coins

The association comprising of sixteen government-approved cryptocurrency exchanges in Japan has reportedly provided a peak of its self-regulatory rules. The focuses are on banning insider trading and preventing exchanges from listing privacy coins.

 Privacy Coins

The Japan Virtual Currency Exchange Association (JVCEA) has given a peak of the draft self-regulatory rules it has been working on, “in an effort to step up consumer protections and improve transparency,” Nikkei reported on Monday. The main focuses of the new regulations are on “insider trading and the trading of new currencies that cannot be traced easily,” the publication detailed, adding:

Privacy Coins & Other Restrictions

Previously we reported that the country’s top financial regulator, the Financial Services Agency (FSA), had pressured exchanges to drop privacy coins. Nikkei soon reported that the agency intended to introduce a rule banning them. Subsequently, Coincheck delisted XMR, DASH, and ZEC.

According to the news outlet, the JVCEA has also introduced its own rules on privacy coins, stating:

In order to prevent another Coincheck incident, cryptocurrency exchanges must better protect customer assets and report audit results to the association. “Customers’ private keys, which are needed to complete transactions, must also be managed offline to minimize hacking risk,” the publication described.

Furthermore, “exchanges will be required to keep their quoted rates from widely deviating from the prevailing market rates. Exchanges would also need to introduce circuit breakers to halt trading should a currency’s value suddenly surge or plunge.”

Strict & Costly Compliance

Following the hack of Coincheck in January, the Financial Services Agency has tightened its oversight of cryptocurrency exchanges including imposing stricter registration requirements as well as on-site inspections.

The agency has handed out a number of business improvement orders as well as suspended a few exchanges. Out of the sixteen registered exchanges, only two were issued business improvement orders – GMO Coin and Tech Bureau. Prior to the Coincheck hack, Japan had sixteen  “deemed dealers” or those exchanges which were allowed to operate while their applications are pending. However, since the FSA started strengthening its rules, eight of them have indicated that they will withdraw their applications.

In addition to the Japan Virtual Currency Exchange Association Japan already has two older associations: the Japan Blockchain Association (JBA) and the Japan Virtual Currency Business Association (JCBA).The Japan Virtual Currency Exchange Association was established in March, also in response to the Coincheck hack, in order to regain public trust in the cryptocurrency industry. The association consists of the sixteen government-approved cryptocurrency exchanges. The chairman and president of the organization is Taizen Okuyama of Money Partners. Bitflyer CEO Yuzo Kano is the Vice Chairman, along with Bitbank President Noriyuki Hiroeno. The other two directors are SBI Virtual Currencies’ Yoshitaka Kitao and GMO Coin’s Tomitaka Ishimura.

According to the news outlet, the Japan Virtual Currency Exchange Association has drawn up nearly one hundred pages of self-regulatory measures which could be costly for cryptocurrency exchanges to comply with. An official at one exchange was quoted saying:

“We’re being subjected to rules almost as tough as the Financial Instruments and Exchange Act.”

Olé Crypto,
CBNN

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