Japanese Crypto Association Tightens Self-Regulatory Measures

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Japanese Crypto Association Tightens Self-Regulatory Measures

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A Japanese self-regulatory body of cryptocurrency exchanges has tightened laws on customer asset management, according to Japan Times. According to sources within the the Japanese Virtual Currency Exchange Association (JVCEA), the group consisting of some of the largest cryptocurrency exchanges operating in the country has established a limit on the amount of digital currencies and tokens that can be managed online to deter future hacking attempts. The exchange association was established in April in an attempt to self-regulate the cryptocurrency exchange landscape.

The move comes after yet another cryptocurrency exchange was hacked in Japan last week. Zaif, the affected exchange lost more than USD 59.7 million worth of cryptocurrencies because of this hack and the tokens were reportedly stored in its hot wallet.

The JVCEA is attempting to limit the risk of hacks by pushing exchanges to keep most of their coins offline in cold storage wallets, with only up to 10-20% of the total customer holdings to be allowed in the hot wallet from which transactions can be made automatically.

The move is swift and pre-emptive because any news of the financial watchdog Financial Services Agency (FSA) will affect all of these exchanges and their operations. The JVCEA believes that self-regulation is important for the future because government interference negatively affects the cryptocurrency circles. It remains to be seen how the FSA will react due to the recent hacking episode in the Asian country, although it has made apparent its frustrations in the case of Zaif.

Japan is one of the most progressive countries in adopting cryptocurrencies and blockchain technology but it also has been the target of some of the biggest hacks in history with the USD 523 million worth of NEM tokens being stolen from CoinCheck exchange earlier this year.

 

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