Crypto Market Update: Japan’s Self-Regulatory Group (JVCEA) Readying Tighter Rules on Digital Assets
- A group of cryptocurrency exchange operators in Japan is readying to tighten up measures following recent cyber breach.
- Action follows reported hack earlier in the month; cryptocurrency exchange Zaif lost an estimated $59.67 million.
Self-Regulatory Group Set To Tighten Rules
The Japan Virtual Currency Exchange Association (JVCEA) is exploring new rules to safeguard against cyber theft, including setting a cap on the amount of digital currencies managed online. This is citing informed sources, being reported by local news outlet, the Japan Times.
Informed sources detailed that the cap will likely to be around 10 – 20% of customer deposits. The JVCEA are said to be soon revising its rules, which were originally drawn up in June following multiple cyber attacks. These will be implemented once all has been approved by the Financial Services Agency. This is as part of the payment services law process in the country.
The move likely received large motive due to the reported hack earlier in September. The Japanese start-up Tech Bureau said that its cryptocurrency exchange, known as Zaif, had been hacked. Losses were estimated around $59.67 million of Bitcoin and two other digital currencies -Bitcoin Cash and Monacoin.
No initial reaction was observed across the cryptocurrency market on this latest update, coming out of Japan as of Sunday 30th September. Despite this, however, Japan and crypto sell-off are not uncommon to have been used in the same sentence over the past years and even months. This means volatility could be in store for digital assets in the short term.
Back in January of this year, the largest reported hack on a Japanese exchange took place with Coincheck losing $530 million worth of NEM in a coordinated attack. This incident massively spooked the market, and was a heavy contributor to the large sell-off in January. As we’ve observed over the past eight months, the market has yet to reclaim January’s peak (although this can’t be solely attributed to the theft). At the time, South Korea’s Attorney General had already spooked investors with FUD related to the possible banning of digital currencies in the country.
Against this backdrop, investors are advised to pay attention to Japan-related volatility.
Most recently, looking in the month of June, another sell-off was seen. This one came after Japan’s financial regulator ordered several cryptocurrency exchanges to improve their practices against money laundering. The action led bitFlyer — the country’s largest crypto exchange — to suspend new account creation. This was initiated to improve internal processes in order to curb money laundering and terrorist financing.
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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