Japan’s Financial Services Agency today granted the local cryptocurrency industry self-regulatory status, giving policing powers to an association backed by the industry.

The Japan Virtual Currency Exchange Association has been bestowed the status of “certified fund settlement business association,” giving it the right to set rules to safeguard customer assets, prevent money laundering and give operational guidelines.

The JVCEA is the result of an agreement among 16 Japanese cryptocurrency exchanges in February to create a self-regulating body that will oversee crypto markets. JVCEA is a successor organization the Japan Cryptocurrency Business Association and Japan Blockchain Association, both of which had attempted to merge without success.

The association hasn’t yet announced its plans for new rules for exchanges, but Reuters noted that the self-regulatory body’s rules are stricter than current Japanese law and that in an evolving landscape, allowing industry experts to set new regulations could help restore public trust after a series of high profile hacking cases.

The prompt for the formation of JVCEA was the theft of $530 million in cryptocurrency from Coincheck in January but the hacks kept on coming. In September, Japanese cryptocurrency exchange Zaif said that 6.7 billion yen ($59.5 million) in crypto had been stolen from its service, including 5,966 bitcoins.

Somewhat ironically, Zaif was both a licensed cryptocurrency exchange and one of the companies that backed the formation of JVCEA to begin with. Conversely, the case may demonstrate how the JVCEA may be more effective.

Zaif had failed two audits undertaken by the FSA, which had ordered it to “reform” its business practices at the time of the hack. The JVCEA, with enhanced policing powers, could have potentially have forced Zaif to comply under threat of closure.

Photo: Nesnad/Wikimedia Commons