A group of digital currency exchanges in Japan said Friday they will form a new organization with the aim of establishing industry business practice standards.
The decision, agreed by all 16 exchanges that are registered with the government, including bitFlyer Inc. and GMO Coin Inc., follows a massive cryptocurrency heist from a Tokyo-based exchange earlier this year that raised questions about the security of digital currency assets.
The organization will draw up rules on advertising and how to prevent illegal activity such as insider trading. It will seek to be recognized as a regulatory body under Japan's payment services law, representatives of the exchanges said, a status that would allow it to punish rule-breakers.
Money Partners Group Co. President Taizen Okuyama, who is slated to head the yet-unnamed organization, said at a press conference in Tokyo that it would take a month or so to set up. Exchanges that are awaiting government approval will also be encouraged to join.
"This is an industry-wide effort to self-regulate, aimed at building an environment where people can feel safe to use these exchanges as soon as possible," Okuyama said.
Digital currency exchanges in Japan had thus far been split between two rival groups, with talks to form a unified industry body making little progress.
That changed after hackers stole 58 billion yen (about $543 million) worth of the cryptocurrency NEM from unregistered exchange Coincheck Inc. in January, the largest digital currency heist in history.
Coincheck is said to have kept the assets in a network-connected "hot wallet," rather than an offline "cold wallet" as is best-practice to prevent security breaches.
The incident, which followed the 2014 theft of 48 billion yen in bitcoin from the now-defunct Mt. Gox, triggered an industry-wide probe by the Financial Services Agency, Japan's financial watchdog.
Police continue their efforts to find the stolen NEM and those responsible for the theft.