Regulations are necessary in the cryptocurrency world. Everyone agrees with it but the way in which these regulations are to be applied and created is a controversial topic. An interesting change might happen in Japan. The cryptocurrency exchanges that are government-registered are interested in creating a special self-regulation body for the entire country.
According to Reuters, this is a move that tries to establish trust and legitimize the area. It is something that is necessary after the January Coincheck hack, which caused losses of $530 million.
At the moment, there is no name for this Japan regulating body and there is no real world about how the change will happen. Everything follows the national oversight we see in Japan at the moment, together with the crypto regulation that appeared in South Korea at the end of January 2018.
During late February initial reports about the formation of the regulatory body appeared. Reports said that there are 2 existing firms that will merge: Japan Blockchain Association and Japan Cryptocurrency Business Association. The idea is to allow just the exchanges that are approved by the government to do exchange business. However, this is something that can be incredibly controversial.
Reuters highlights that this body is going to eventually invite different cryptocurrency exchanges that have pending registrations with the government, together with those that are to “register in the future”. This is where problems can appear.
According to Monetary Library specialists, there is a need to have regulatory bodies in all countries, not just in Japan. The move that is done at the moment in the country can be quite beneficial but the oversight mentioned above can be really problematic. The idea is that this opens the doors to potential speculations. Having just approved exchange programs be involved in the business is a good idea and when you allow new companies to come in after they simply say they will want to be regulated in the future is something that can dictate choices made by the regulatory body.
One of the best ways to protect businesses and increase trust in cryptocurrency is to get the governments involved. Having the official seal of approval is something that helps but only if the regulations that are decided are going to actually be beneficial for all potential users. If you want to exchange cryptocurrency and use services of businesses that are not controlled in any way you open the doors to potential losses. Having exchanges that are not regulated be a part of the decision panel can easily lead to such unwanted situations.
On the whole, the decision is a good one but application is still not as it should be. Fortunately, the project is not ended and there is a pretty good possibility only government-regulated cryptocurrency exchange companies are going to be involved in regulatory decisions. Such an oversight sometimes happens and might just be a simple mistake. Now that analysts identified it, we expect changes to happen. As a result, if the self-regulating body is launched, cryptocurrency values will go up so investors are keeping an eye on news.