The Japan Virtual Currency Exchange Association (JVCEA), the body that governs the country’s digital currency exchanges, has come under fire from criticism from the Financial Services Agency (FSA), Japan’s financial market regulator.
In a Financial Times (FT) report, a person close to the JVCEA and the government revealed that the country’s experiment of giving the digital asset industry self-regulatory powers could backfire. According to the source, the FSA has sounded the alarm over how slowly the digital asset self-regulatory body is doing its business.
“When Japan decided to experiment with self-regulation of the cryptocurrency industry, many people around the world said it wouldn’t work. Unfortunately, for now, it seems they’re right” , the person said.
The report noted that the FSA’s concerns centered on delays in implementing crucial anti-money laundering regulations and the management of the body.
According to the minutes of a recent meeting the FSA held with the association, the regulator said it was “unclear what kind of deliberations the body had, what the decision-making process was , why the situation was as it was, and what was the responsibility of the council members.
The report revealed that the regulator had also previously given JVCEA “extremely stern warnings” in meetings at the end of 2021. JVCEA board member Masao Yanaga confirmed the brewing situation, adding that the body -even was also in crisis, according to the report. Yanaga was quoted by the outlet as saying the JVCEA cannot move quickly with the regulations due to a lack of resources, adding that its members are concerned whether the body can establish the AML regulations as they would be difficult. to be implemented as this would require international collaboration. with other exchanges.
Japan’s history with the JVCEA
Founded in 2018 following a digital asset market crash, this isn’t the first time JVCEA has run into trouble with the FSA. As Bloomberg reports, the body recently came under pressure from Japanese Prime Minister Fumio Kishida.
Following Kishida’s comments, the JVCEA has decided to revise its criteria for selecting token listings. Meanwhile, the JVCEA has also come up with a “green list” of about 19 digital assets that don’t need to go through the lengthy screening process before being listed by members of the body.
Additionally, members of the body, including all local digital asset exchanges and international exchanges licensed to operate in Japan, such as Coinbase (NASDAQ: COIN) and FTX, have been under pressure to implement the imposed sanctions. to Russia.
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