U.S. crypto exchange giant Coinbase is now the latest member of the Japan Virtual Currency Exchange Association (JVCEA) — a self-regulatory organization (SRO) for the country’s cryptocurrency exchange market. With Coinbase joining the JVCEA, the road may now be open for the platform to obtain an operating license from financial regulators in Japan.
Coinbase has been pursuing a massive expansion plan since 2019 offering its services in more than 100 different countries while pushing adoption for its suite of products like Coinbase Custody. Japan, meanwhile, has in recent times stepped up its effort to maintain robust oversight over its cryptocurrency scene.
Coinbase Becomes JVCEA Class 2 Member
According to a JVCEA press release issued on Monday (March 2, 2020), Coinbase is now a second-class member of the Association. Coinbase joined two other establishments — Tokyo Hash and Digital Asset Markets as the latest additions to the JVCEA ranks.
With the three new entrants, the list of the JVCEA’s second-class membership swells to nine with other platforms such as OK Coin, CoinBest, and Coinage already in this cadre. The JVCEA also has 21 first-class members which include companies like BitFlyer, Coincheck, and SBI VC.
According to the JVCEA, second-class membership of the Association is reserved for companies intending to enter the Japanese crypto market. With Coinbase now joining the ranks of the JVCEA, the exchange giant may be a step closer to obtaining the go-ahead from financial regulators to begin operations in the country.
Coinbase Japan in the Works?
Back in 2018, the U.S. crypto exchange behemoth announced plans to enter the Japanese market as part of its Asian expansion. As previously reported by Blockonomi, the company has opened its office in Japan, even announcing the appointment of Nao Kitazawa, formerly of Morgan Stanley to head its operations in the country.
However, the platform has not obtained a license from the country’s Financial Services Agency (FSA). Japan’s financial regulator was the first to create a standardized set of guidelines for legalizing cryptocurrency exchanges, a move that saw platforms negatively impacted by China’s 2017 ICO and crypto trading ban flock to the country.
The FSA has licensed 21 cryptocurrency exchanges in the country and as of mid-2019 had over 100 pending licensing applications from various crypto trading platforms.
JVCEA Contributing to Crypto Regulations in Japan
As a self-regulatory body, the JVCEA has been working in tandem with the FSA to police the nation’s crypto exchange scene. The JVCEA emerged as a direct result of high-profile crypto exchange hacks including that of Coincheck which saw the theft of over $500 million in NEM crypto tokens.
With the FSA insisting on robust security features for crypto exchanges, the JVCEA has been policing its members, ensuring strict compliance with FSA regulations. The FSA and the JVCEA have also been putting platforms to task over money-laundering concerns especially with the emergence of guidelines from the Financial Action Task Force (FATF) concerning crypto money laundering.
Apart from exchange guidelines, the JVCEA has also been involved with regulations regarding cryptocurrency margin trading. Back in 2018, the Association called for a reduction in the leverage limit on crypto margin trading to four times the trader’s deposit.
In March 2019, the FSA ruled that crypto margin leverage trading in Japan will be capped at 4x with the law expected to go into effect in April 2020.
The JVCEA is one of a few crypto self-regulatory agencies in different countries. In October 2019, major cryptocurrency businesses in the U.S. like Coinbase, Bittrex, and Kraken formed the Crypto Rating Council — a cryptocurrency SRO focusing on determining which digital tokens were most likely to be securities based on U.S. Federal securities regulations.