Will Japan’s Self-Regulatory Crypto Market Impact Global Cryptocurrency Use?

With Japan operating as one of the largest markets for crypto-trading, accounting for 40% of total global volume, its self-regulatory market implications are set to transform the world of cryptocurrencies. With numerous exchanges forming self-regulatory bodies across Japan following the hack of Coincheck in January, the Japanese Financial Services Agency has upped the scrutiny that the industry had previously been receiving. In order to help tackle this problem and regulate the market but continue to focus on the decentralised nature of the cryptocurrencies, the market has input 16 crypto exchange operators, all of whom are fully approved by the FSA. Here, we’re taking a closer look at what whether this new self-regulatory concept within the crypto market is likely to make an impact on global cryptocurrency use.

‘Approved’ Cryptocurrencies

While many critics originally spoke about the negative long-term effect of these cryptocurrencies, there have been numerous benefits which have come to light as the regulations have been put into effect. Firstly, it was suggested that all currencies would have to be ‘approved’ in order to become a legal entity and many believed that this selection of what would constitute as an approved currency would be exceptionally strict. Nevertheless, this reach of ‘approved’ currencies has been much looser than initially anticipated, with the likes of tokens and altcoins such as Pepecash receiving the same kind of categorisation as Bitcoin as a ‘first class’ cryptocurrency which can be legally traded on licensed exchanges. As long as the transaction histories of these cryptocurrencies can be audited effectively, the regulations are likely to remain loose.


Towards the second half of last year, the FSA began to issue licenses to numerous crypto exchange operators, with eleven being approved in September, four more in December, and the sixteenth being approved later on in December. In addition to this, a number of ‘quasi’ cryptocurrency operators have continued to be allowed to conduct business while their licenses are pending. With over 100 companies looking to seek a license, this truly is beginning to revolutionise the way cryptocurrency exchanges work in Japan.

The Impact Around The World

But what about the rest of the world? Some critics believe that by beginning to regulate the way cryptocurrency exchanges work, there could be more room for governments to begin to attempt a centralisation process of the key cryptocurrencies such as Bitcoin and Ethereum. However, with regulation comes a lot of restrictions. Regardless, this hasn’t stopped a number of crypto companies beginning to set up trade associations, with seven companies in the UK doing so in order to help boost sector transparency.

The Benefits Of Market Regulation

A key benefit of market regulation is the opportunity for each currency to soar in value as a result of attracting new investors which may have originally been put off by the volatility, but also bring a new level of transparency to the market. While some key regulators believe that the price bubble could implode, the current trends show that the cryptocurrency is set to continue to boom.

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