A group of Japanese cryptocurrency exchanges have formally submitted a detailed proposal to form a self-regulatory organization to the nation’s Financial Services Agency (FSA).
The Japan Virtual Currency Exchange Association (JVCEA), which was formed by 16 exchanges in March and registered with the FSA in April, has applied to become a “certified fund settlement business association,” the Asia Times reported Monday. This would effectively allow the JVCEA to impose self-regulatory rules on the cryptocurrency trading market as part of an effort to create stricter industry standards.
A working draft of the proposed rules in the nearly 100-page document would require cryptocurrency exchanges to regularly conduct audits, as well as prohibit certain anonymous cryptocurrencies from being traded such as monero or dash, Nikkei Asia reported last month.
Even more recently, the JVCEA said it also wished to limit the amount of borrowing when it came to margin trading, that is trading with borrowed money, to be at a maximum of four times an investor’s original deposit, as previously reported by CoinDesk.
These are suggestions by the association aim to prevent repeats of troubling incidents such as the Coincheck hack in which an estimated $533 million was taken from the exchange’s digital wallets.
It also follows from trends by Japan’s Financial Services Agency themselves to crackdown on the cryptocurrency industry by more closely inspecting the activity of licensed cryptocurrency exchange operations, issuing “business improvement orders” aimed at enhancing internal-auditing and user-protection systems.