Crypto Exchanges in Japan Set to Self-Regulate Following Hacks Costing Over $500 Million. Since cryptocurrencies and initial coin offerings (ICOs) started to become more and more popular over the past year or so, there has also been an explosion in the number of hacks and scams that have occurred.
There is such a large volume of money entering into the sector coupled with little oversight and loose regulations that it can prove to be ripe pickings for nefarious individuals.
In one of the more recent examples of this sort of behaviour, there were a number of crypto exchanges in Japan that were subjected to hacks in January which resulted in more than $500 million being stolen. As a result of this theft, sixteen exchanges in the country have come together and decided to create a self-regulatory organisation in order to protect themselves from future attacks.
It is believed that this team of exchanges who are fully licensed will be represented by a couple of leading trade organisations in the country who will be creating and releasing new standard by April. These guidelines are set to aid the Financial Services Agency (FSA) in Japan when it comes to improving levels of security in the sector. They will also place a focus on improving the regulatory framework when it comes to ICOs.
There has been no name given to this new organisation as of yet following the agreement to come together last week under the leadership of the two trade groups – the Japan Blockchain Association (JBA) and the Japan Cryptocurrency Business Association (JCBA).
The Money Partners Group offering exchange trading company’s president will act as the chairman of this new group, with the vice president being the CEO of bitFlyer, an exchange startup.
This decision to band together comes not long after reports were circulating about the cryptocurrency ecosystem in Japan being targeted for development.
It was also to show a sign of strength going forward by these exchanges in order to provide confidence to traders and investors in the country that their money will be protected when using these exchanges. It was the NEM token that was offered by Coincheck that was the main result of a hack that was worth more than $500 million.
Coincheck to date has received no approval from the financial regulator in the country due to their security issues, something that the FSA had given prior warnings to them about in advance of the attack. Therefore, it shows how the investor’s interests were not being looked after effectively by Coincheck, but there was no regulatory body to enforce these security improvements that were clearly needed.
It will be interesting to see how this group turns out and how effective they will be when it comes to self-regulation. This could prove to be a fascinating case study for exchanges around the world who may decide to adopt a similar idea in the future if all goes to plan in Japan.
Whatever happens, it will certainly make the authorities around the world sit up and see how they may frame their own regulations.