Thus, the Japan Virtual Currency Exchange Association is allowed to police and sanction exchanges for any violations. The government has been reviewing its approach toward an industry that has been hit twice by large-scale thefts such as Zaif, Tech Bureau and Coincheck.
The FSA approval gives the industry association rights to set rules to safeguard customer assets, prevent money laundering, and give operational guidelines. The association will also have to police compliance. Some FSA officials said the crypto industry now needs heavier regulatory approach, while not wanting to stifle its growth.
Similar officially sanctioned bodies exist in industries such as securities brokerages. In 2017, Japan became the first country to regulate cryptocurrency exchanges, as it encourages technological innovation while ensuring consumer protection. Exchanges have to register with FSA.
FSA also published a set of guidelines for those applying to run crypto exchange. The agency said there are about 160 entities expressed interest.
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