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Another Blow To Monero, Dash And Other Privacy Coins In Japan

Exchange Japan

Regulation

Trading

Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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Last updated:

June 26, 2023

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The self-regulating Japan Virtual Currency Exchange Association (JVCEA), a group of the country’s leading cryptocurrency exchanges, is set to impose guidelines on anonymous trading, money laundering, insider trading and willful market manipulation.

As widely forecast, the guidelines also ask exchanges to remove or refrain from listing so-called “anonymous” cryptocurrencies, such as Monero and Dash. The government regulator, the Financial Services Agency (FSA) is thought to have politely requested agencies to stop trading in these coins, as it believes criminal groups are making use of them in money-laundering efforts.

The Coincheck exchange appears to have preempted this decision, and last month announced it would cease trading in a total of four coins.

Exchanges will also need to conduct independent audits and file their results to the JVCEA. Additionally, they will be required to manage their customers’ private keys offline and use circuit breaker technology to stop trading – in the event that a token’s value rises or falls suddenly or in an unnatural manner.

The guidelines also require exchanges to shore up their data management security. Many exchanges have been accused of purposely “leaking” currency listing information to online communities in an attempt to drive up the value of tokens before trading begins, or misusing listing information to allow for insider trading.

Per newspaper Nihon Keizai Shimbun, the association has drafted a 100-page regulations document, and will ask members to vote as to whether they wish to accept these when the JVCEA next convenes on June 27.

The JVCEA says that, if accepted, the guidelines will become binding for all its members – providing FSA grants the body official recognition.

Similar proposals to the JVCEA’s guidelines were recently put forward by South Korea’s own would-be self-regulating body, the Korea Blockchain Association. Some exchanges in the country also preemptively falling into line with the spirit of such regulations, removing “anonymous” tokens from their platforms.