TOKYO -- Japan's cryptocurrency industry is preparing to establish a self-regulatory body consisting only of government-approved marketplaces in an effort to regain the public's trust after a vast digital currency heist last month.
Sixteen registered virtual currency marketplace operators and executives from some unregistered ones attended a closed meeting in Tokyo on Tuesday to discuss the new organization. Topics included the establishment of a general incorporated association under Japan's revised Payment Services Act, an outline of voluntary regulations, and how to proceed going forward.
"To win back public trust, we must" establish a self-regulatory body, said an executive from one unregistered operator.
Taizen Okuyama, president of foreign currency trading service provider Money Partners Group, is likely to be the new organization's chairman. The vice chairman is expected to be Yuzo Kano, CEO of bitFlyer, the country's top cryptocurrency marketplace operator. The new entity will promptly finalize details, including writing up an articles of association and putting together a board of directors, to apply for approval from the Financial Services Agency.
Japan's cryptocurrency industry has lacked a unified voice, as two business groups -- the Japan Blockchain Association and the Japan Cryptocurrency Business Association -- have operated independently according to their own rules.
The FSA has pushed for a merger by refusing to recognize more than one self-regulating body. After some discussion, the industry decided to create an altogether new organization independent of the two current groups.
The new body will work to create fair trade rules and use self-regulation to plug loopholes in the law. In addition to discussing the direction of virtual currency policy and legislation with the government, the new organization will spell out its regulatory policy on issues like insider trading, advertising and security. It will also set penalties for members that do not follow these rules.
Membership in the new body will be limited to marketplaces that have received official approval from the FSA. Japan is one of the first nations in the world to introduce a registration system for virtual currency marketplaces, which it did under its revised Payment Services Act.
Businesses that had already been operating such marketplaces when the revised act took effect are allowed to continue offering their services while awaiting the agency's assessment.
There are currently 16 registered operators and 16 unregistered ones. Coincheck, the target of the massive cryptocurrency theft last month, is unregistered, a member of both existing industry groups and will not be a part of the new organization.
Nikkei group company QUICK holds an equity stake in bitFlyer.