The Financial Services Agency (FSA), Japan’s crypto market regulator, has issued a renewed warning to the Japan Virtual Currency Exchange Association (JVCEA), the country’s crypto exchanges self-regulatory body, about the October full-scale implementation of FATF travel rules for crypto.
Local news outlet CoinPost reports that the FSA also criticized the management of the JVCEA. In particular, the financial market watchdog stated that it is dissatisfied with the JVCEA’s speed in rolling out anti-money laundering rules, how the organization handles decision-making and communication, and how it handles delegating executive responsibilities.
In response, the JVCEA has stated that it is working to meet up with the FSA’s standards, but still faces challenges. For one, its efforts to introduce anti-money laundering rules for crypto exchange in Japan have been undermined by the cross-border nature of the crypto market which has made reporting transactions difficult.
Masako Yamaga, a director of the JVCEA and a professor at Meiji University, remarked that implementing the travel rules will require international collaboration. Similarly, he noted management and communication challenges come from not having enough manpower with experience in crypto regulations.
Notably, this is not the first time the FSA is expressing its dissatisfaction with the JVCEA’s pace of rolling out regulations. Back in July, Financial Times reported that the JVCEA was in the grips of an internal crisis that had the FSA bearing down on it.
At the time, the FSA emphasized the same concerns even as employees of the association sought to unionize to oppose the JVCEA’s plans to downsize its employee headcount. The association had been struggling to keep running costs down as the crypto market entered bear territory globally.
Amidst the tussle, the JVCEA has also successfully introduced some more lenient rule changes for exchanges. The association has put together a “Green List” of cryptocurrencies that registered exchanges can list without going through the rigorous process of screening that was previously required.
Japan still attracting crypto exchanges with its new economic policy focused on Web 3.0
While JVCEA registered exchanges struggle to meet up with the FCA’s implementation of the FATF travel rules, more exchanges are looking to enter the Japanese market. Bloomberg reports that the global biggest crypto exchange by trading volume Binance is making moves to reopen in Japan after leaving four years ago.
Binance’s renewed attention is thanks to the new economic policy introduced by Japan’s Prime Minister Fumio Kishida, the report notes. Under this policy, the Japanese government has already set up a Web 3.0 Policy Office that will focus on promoting the adoption of Web 3.0-related innovations.