Jan Granroth: Japan is miles ahead Europe when it comes to cryptocurrencies

Jan Granroth: Japan is miles ahead Europe when it comes to cryptocurrencies.

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Jan Granroth

jan.granroth@trijo.co

OPINION. After the largest crypto exchange in Japan yet again got hacked, the authorities have had enough and decided to act. Instead of reinventing the wheel, we should look at Japan and, hopefully, learn from their mistakes.

Many associate Japan with a modern and well-developed society at the forefront. This is, however, not true in all areas, but when it comes to cryptocurrencies, Japan is definitely a pioneer country that has advanced ahead of most of us. There, bitcoin has officially been classified as a legal tender.

In other words, the authorities have realized the advantages of cryptocurrencies, encouraged entrepreneurship and innovation, and embraced a permissive attitude.

When it was clear that the largest Japanese crypto exchange, Coincheck, located in Tokyo, just like Mt. Gox, had been hacked the authorities felt a need to act. Not too surprising given that they had embraced the industry and even licensed the exchange in question who, on top of all, had aimed their marketing towards “regular people”.

An industry with shortcomings

Ever since, the authorities have kept an eye on the industry, and unfortunately also found many shortcomings in its businesses. Whether or not they should have adequate methods in order to prevent money laundering (KYC and AML) might be a matter of personal opinion, but the fact that many of the companies don’t seem to understand the difference between the customers’ funds and their own is unacceptable.

Worryingly enough, the above concerns licensed exchanges. Among the unregistered ones, even worse misdoings were found; some seemed to consider the funds of their customers as a personal piggy bank and displayed an alarming lack of interest for safety concerns. On top of all, the companies had clear difficulties with even understanding the issues and measures presented by the authorities.

Japan is a country known for good governance and compliance. Regardless, unacceptable behavior is continuously occurring within the industry. One can only imagine what goes on in other places of the world.

The industry is self-regulating

Finally, the stakeholders of the industry have come to realize the need to be proactive (if only to avoid further regulation) and, thus, founded Japan Virtual Currency Exchange Association (JVCEA).

Even though legal approval is still pending and internal quarreling already has begun, it is a step in the right direction. After all, it is for the interest of the industry itself to reassure that they at least follow the same self-evident practices as in other industries, such as preventing employees to exploit insider information.

There is no reason to believe that the Japanese do it all correctly, but let’s not reinvent the wheel. Let’s make sure to closely follow the Japanese progress. Still, the industry is in its infancy in our regions here in Scandinavia, but hopefully, it will show responsibility (and be smart enough) to anticipate and avoid problems, work for collaboration, internal control mechanisms, and a sound corporate governance.

If this is successful, it will lead to happy authorities and customers, which obviously benefits the whole industry.

Jan Granroth,
Reporter at Trijo News

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