New crypto regulations will be introduced in Japan. However, this time the official regulator Financial Services Agency (FSA) is not involved in the process. New regulations are coming from the Japanese Virtual Currency Exchange Association (JVCEA).
Cryptocurrency exchanges, store most of their crypto assets offline in the "cold" wallets. However, some of the funds are also held in "hot" wallets that are connected to the Web, which makes them vulnerable to possible hacker attacks. The new JVCEA rules set a limit on the share of assets that member stock exchanges can store this way.
JVCEA aims to set a maximum amount for online managed assets for exchanges. According to this, exchanges can keep 10%-20% of client assets online. The association wants to implement this adjustment to prevent a similar hack like the recent Tech Bureau Corp. incident.
Tech Bureau Corp., is the operator of Zaif exchange in Japan, also a member of JVCEA. Last month, the platform was the subject for a theft of $60 million worth cryptocurrency. All stolen assets were handled online at Zaif. After the incident, the president of JVCEA, Tadayoshi Okuyama, published a letter on their website saying that they will continue to protect users as their top priority and work closely with authorities to make efforts to prevent any recurrence.
The Reddit community also discussed the theft and one user asked an important question:
It is true that after so many hacker attacks in our crypto-history, it is not logical to move so many bitcoins online.
Therefore, it is not surprising for JVCEA to react to this incident which happened to a member exchange.
Japanese official regulator FSA approved 16 exchanges earlier this year and they came together to create a self-governing body.
JVCEA aims to give rules and guidelines to member exchanges in order to create a stronger crypto community, 100% fitting to local regulations. The association also invokes trust among investors.
JCEA is also reviewing the initiatives developed in the summer related to the cryptocurrency activity in Japan. The association will provide recommendations for certification to the Japanese Financial Services Agency (FSA) in the near future. In July, JVCEA offered to set limits on trading volumes for some users. At the same time, the association proposed to limit the leverage in margin trading to a ratio of 1:4.
Earlier this year, hackers attacked one of the leading cryptocurrency exchanges in the country Coincheck and stole $523 million in NEM tokens.
JVCEA is now waiting for the certification of the framework from FSA. The association draws up the regulation for its members but FSA must approve the regulation according to the law.
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