Japan's cryptocurrency industry to set up self-regulatory body

Two cryptocurrency industry groups in Japan have agreed to merge in an effort to accelerate the establishment of voluntary regulations and regain public trust in the aftermath of a massive virtual currency heist.

The new entity, set to launch April 1, will link the Japan Blockchain Association, which was founded around the country's top digital currency market player bitFlyer, and the Japan Cryptocurrency Business Association, whose membership includes Osaka-based virtual currency trading service provider Tech Bureau.

Integration talks, which began after the hack attack on cryptocurrency marketplace operator Coincheck late last month, had yielded a basic agreement by Thursday. The new organization's chairman will likely be JCBA Chairman Taizen Okuyama, president of Money Partners Group, a foreign currency exchange business operator. JBA Representative Director Yuzo Kano, who is also CEO of bitFlyer, is expected to become the self-regulatory body's vice chairman.

The new organization plans to quickly tackle the creation of self-imposed rules on the protection of clients' assets, as well as system trouble, advertising and insider trading.

Japan's revised Payment Services Act, which took effect last April, requires the registration of virtual currency marketplace operators. Under the revised law, those operators are allowed to form a voluntary self-regulatory organization. The cryptocurrency industry already had two industry groups, but the Financial Services Agency refused to allow two self-regulatory bodies, urging the industry to create a unified organization by merging the JBA and the JCBA.

Once the new body is approved by the agency, it will gain the power to set penalties for breaches of its self-imposed rules. This should also help address calls by banks and other businesses in the conventional financial industry for virtual currency businesses to establish a robust self-regulatory regime.