Japan Bourses to Make Trading More Rigid
Zac Thompson
A league of authorized bitcoin exchanges in Japan is supposedly working on several measures to toughen trading in the country, a local report said.
The Virtual Currency Exchange Association (Jvcea) is planning to impose numerous limits for its cryptocurrency exchange members, according to Jiji Press News Agency. “The association will decide on the issue soon. It will then file with the Financial Services Agency (FSA), for approval “to be recognized as a self-regulatory body under the payment services law,” the sources privy to the matter disclosed.
The association has not issued an official statement regarding the matter.
However, sources explained the proposed rule is aiming to avert crypto traders with relatively small assets from incurring significant losses and dealing with challenges with daily expenses. “The industry group plans to allow exchange operators to choose from two options: A blanket ceiling that is low enough for the safety of customers with limited assets or setting different limits for different customers based on their age, assets, investment experience and income levels,” sources added.
The self-regulatory rules were expected to be issued in the previous month. However, the report said Jvcea faced a setback when the FSA released business improvement orders to six of the group’s members, prompting two of its vice presidents to step down. Since its inception in May this year, Jvcea has been working on such measures. Nikkei reported last month it is seeking to outline rules prohibiting insider trading and privacy coins.
The move comes as a separate report stated that Jvcea is intendingn to curtail margin trading, lowering leverage by four times. At present, Japanese crypto bouses offer 25 times leverage.
“The proposed rules explicitly ban insider trading. Word has leaked previously that a major exchange would start handling a new currency, which led to a surge in the currency’s value and left many suspecting market manipulation. Such activity would represent a clear violation of the new rules,” the report said, citing people familiar with the matter.
“The group also plans to require minors to get permission from parents or other guardians before trading, prohibit margin trading in principle, and demand regular checks on the decision-making ability of elderly customers. It will also restrict large-lot orders as a measure against money laundering,” sources divulged.
Earlier, the FSA pressed exchanges to ditch privacy coins. Jvcea, meanwhile, had said it introduced its own guidelines on privacy coins.
“The association also wants to prohibit exchanges from accepting new currencies that cannot be traced to previous sellers, since such currencies could easily be used for money laundering and are hard to monitor. Highly anonymous coins like Monero, Dash and Zcash could be forced out of the mainstream,” Jvcea said at that time.
To avoid another Coincheck incident, crypto bourses were encouraged to heighten protection for client assets and report audit results to the group.
“Customers’ private keys, which are needed to complete transactions, must also be managed offline to minimize hacking risk.” Moreover, exchanges will be required to keep their quoted rates from widely deviating from the prevailing market rates. Exchanges would also need to introduce circuit breakers to halt trading should a currency’s value suddenly surge or plunge.”
