Two of Japan’s largest cryptocurrency entities — The Japan Blockchain Association and the Japan Cryptocurrency Business Association — have announced they will be forming a new self-regulatory body for the industry.
The decision comes in the wake of several high-profile cryptocurrency thefts that have cost investors hundreds of millions of dollars and caused confidence in the safety and security of the industry to plunge amongst consumers.
The the new organization is expected take shape and become operational as early as April.
$530 In Crypto Stolen From Coincheck Exchange
There had been previous attempts by Japan’s cryptocurrency stakeholders to self-regulate the industry but none of them came to anything until now.
What appears to have made this attempt different is that it comes in the wake of one of the most shocking cryptocurrency thefts in history. $530 million in customers’ cryptocurrencies were stolen from Japanese exchange firm Coincheck.
Coincheck continues to operate and has made a public pledge to reimburse all of the nearly quarter million customers who were affected by the attack. Overall, the total cost of that reimbursement could be as high as $400 million.
The affair has resulted in several lawsuits, one of which seeking damages as high as $167,000. In addition, lawyers for the plaintiff, in that case, are on the record as saying that as many as 1,000 additional people may eventually file suit against Coincheck.
There is already a class action lawsuit making its way through the Japanese courts.
Japanese Media Circus
The scale of the affair, the huge intrigue surrounding it, and the public fascination with cryptocurrencies generally has made this a very high-profile case in the Japanese media.
There is also the fact this isn’t the first time that something like this has happened in Japan. The country was already notorious in the cryptocurrency world for the famed ‘MtGox’ hack that saw half a billion crypto tokens lost to hackers in 2014.
Riding the wave of the public’s shock at that incident, Japanese media have singled out the condemnation of Coincheck’s security measures by many of the world’s leading cryptocurrency security experts. There is a general consensus in the community that not enough was stunned to safeguard customers’ money.
Japanese Government Response
The ‘MtGox’ affair had already galvanized Japanese government to take some action to regulate the cryptocurrency industry. However, it’s now clear that whatever measures were passed in the wake of that attack were not sufficient to protect consumers from a repeat incident.
Although nothing concrete has materialized, it’s likely that the Japanese government will now pass additional regulatory measures. Although consumer protection is undoubtedly one of the reasons that the industry has now decided to self-regulate, there’s little doubt that their goal is also to keep the inevitable government regulation to a minimum.
However, given the aggrandized nature of the affair in the media, it remains unclear whether that will be possible.