Move comes to promote trust and prevent malpractice.
A phalanx of Japanese government-registered cryptocurrency exchanges have announced they are to set up their own regulator in the region, to promote trust and snuff out malpractice.
In total, sixteen government-registered cryptocurrency exchanges have said they will work together to set up a self-regulating committee in an attempt to garner trust in an nascent industry few outside tech circles truly understand and that has been recently rocked once again by yet another scandal.
In January, hackers managed to steal around US $530 million from Tokyo-based exchange, Coincheck Inc, exposing serious flaws in the current system and raising questions over just how Japan regulates digital currencies.
First isn’t always the best
Late last year, Japan became the first country to formally institute a form of regulation over cryptocurrency exchanges based in Japan, in order to try and curtail illegal uses of cryptocurrencies and protect customers.
The move was also widely seen as an attempt to legitimize and care for a still young and promising financial sector.
Self-regulation has now become an urgent imperative for Japan’s exchanges. Only last month, an error at one of the exchanges allowed investors to purchase bitcoins for free, albeit very briefly. While no-one was ultimately able to gain from the mistake, it shone another unwanted spotlight on the industry.
As initially reported by news agency Reuters, the self-regulating committee will consist of sixteen individual digital exchanges, but will be open to other crypto exchanges who have registered with the Japanese government, including those who intend to apply in the future, and those whose applications to register are still pending.
Devil in the detail
At the time of writing, there was little more information about the news, including neither its name or what powers the exchanges will give it to enforce malpractice. Despite this, the move has been broadly welcomed by those within the industry, even if details are somewhat light on the ground.