Coincheck Hack Prompts Japanese Crypto Exchanges to Self-Regulate
Several Japanese cryptocurrency exchanges have joined forces to form a self-regulatory body in an effort to better protect investors following last month’s attack on Coincheck, which resulted in the loss of hundreds of millions of dollars.
Japan Embraces Self-Regulation
A total of sixteen exchanges will work on a new self-regulatory regime to be implemented as early as next week, according to Reuters, which cited two sources familiar with the discussions. The new body will govern exchanges currently registered with Japan’s Financial Services Association (FSA), and will replace a previous proposal to merge two separate bodies – the Japan Cryptocurrency Business Association and the Japan Blockchain Association.
Japan is known to be one of the most favorable jurisdictions for cryptocurrency regulation after the government formally recognized digital currency as a form of money. Since last year, the FSA has been primarily responsible for issuing licenses to domestic exchanges.
Concerns over safety have preoccupied exchanges since hackers made off with over $500 million worth of NEM tokens last month. The attack, which targeted Tokyo-based cryptocurrency exchange Coincheck, resulted in the largest monetary loss in history. About 523 million units of NEM were illegally redirected from the exchange in a theft that impacted some 260,000 traders. Coincheck later announced it would compensate traders for the stolen funds at a rate of 81 U.S. cents per NEM unit.
Since the heist, hackers have successfully sold $84.7 million worth of NEM tokens, pushing the value of the token lower. The coins have reportedly sold on the dark web at a discount of 15%, according to Asian Review Nikkei. The NEM Foundation has said it is tracking where the coins are being transferred, although the number of accounts receiving stolen funds is growing rapidly.
When measured in terms of market cap, NEM is currently ranked 13th among active cryptocurrencies with a total value of $4.5 billion. At the time of writing, the coin was valued at roughly 51 U.S. cents per unit. The majority of NEM’s trade volume is handled by South Korean exchanges, with Upbit alone accounting for roughly 41% of total transactions.
In the wake of the attack, Japanese regulators announced they would conduct on-site expectations at unlicensed cryptocurrency exchanges. However, it remains unclear whether these platforms will join the effort to self-regulate the market.
Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.
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