Japan's Self-Regulatory Project in Peril as Financial Regulator Reprimands Crypto Advocacy Group: Report

The JVCEA has received an “extremely stern warning” over delays in anti-money-laundering rules and poor governance.

AccessTimeIconJul 20, 2022 at 10:27 a.m. UTC
Updated Jul 20, 2022 at 3:10 p.m. UTC

Sandali Handagama is a CoinDesk reporter with a focus on crypto regulation and policy. She does not own any crypto.

Japan's "self-regulation experiment" for its digital asset sector is unraveling as disagreements between financial regulators and the industry advocacy body deepen, according to a Financial Times report.

  • The newspaper conducted "extensive interviews" with industry executives, lawyers and financial regulators who "sounded the alarm over a spiraling regulatory crisis in Japan’s multibillion-dollar virtual asset business."
  • The Financial Services Agency, the country's financial watchdog, has "repeatedly criticized" the Japan Virtual Currency Exchange Association (JVCEA), an advocacy group set up in 2018 to promote self-regulation in the crypto industry, the report said.
  • Meeting minutes obtained by the Financial Times showed that the JVCEA received an “extremely stern warning” from the FSA in two meetings last year. The regulator was concerned about delays in anti-money-laundering regulation and that it wasn't privy to deliberations and decision-making processes of the association, according to the report.
  • The minutes also showed the FSA saw a lack of communication between JVCEA leadership and members, resulting in "poor management." The association is made up of about 40 digital asset firms representing the industry.
  • According to the report, the secretariat of the JVCEA formed a union for protection in what the report calls "a stunning act of defiance for Japan."
  • JVCEA board member Masao Yanaga told the newspaper that the JVCEA lacked resources and that AML regulations were hard to implement because of a lack of international agreements on sharing data.
  • The JVCEA also said it was making improvements in response to the regulator's concerns.
  • Regulators around the world are scrambling to ensure sturdy rules are in place after the recent market downturn saw a number of high-profile crypto companies collapse and $2 trillion wiped out of crypto markets in a matter of weeks.





DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

CoinDesk - Unknown

Sandali Handagama is a CoinDesk reporter with a focus on crypto regulation and policy. She does not own any crypto.

CoinDesk - Unknown

Sandali Handagama is a CoinDesk reporter with a focus on crypto regulation and policy. She does not own any crypto.