Exchanges Band together to Raise Confidence in CryptocurrenciesApril 24, 2018
The crypto market has been in a steady downward tumble ever since the end of January 2018. At that moment, the prices that have grown incredibly in 2017 began to drop down, some faster and some slower.
However, they all went down really quickly and the market has lost much in its previous value. The same applies to individual digital currencies and the whole crypto ecosystem. Because of this, the value of tokens and their market cap has been sliding rapidly. While the market has a lot more to go for the gains of 2017 to be jeopardized, it is still clear that the wider public perception was affected by this.
What was an incredible investment tool in 2017 has now become something dangerously volatile and prone to sudden price failure. Of course, this has been true for some time now, but with the mainstream popularity of the previous year, any faltering of this magnitude is now seen and heavily reported on by mainstream media. The same news is then consumed by the users who are less likely to invest in the crypto space.
All of this forms a vicious circle where bad news breeds more bad news and often can result in huge losses by panicking investors. Of course, the same news is also bad for the crypto community, which is rightly worried. The same worry is only exacerbated by the potential regulations that are coming into this industry in countries like South Korea and the US.
Yet, at the same time, a group of digital exchange providers is determined to do something about this problem. Their aim is ambitious and impressive – they wish to actively restore user confidence in the entire crypto space.
Japan’s Cryptocurrency Exchanges Group
A set of cryptocurrency exchanges that are fully licensed in Japan formed with the purpose of restoring market confidence. The route they plan to take is an adoption of a set of self-imposed rules. The group of 16 exchanges, according to the Asahi Shimbun, a local news outlet, launched the JCEA (Japanese Cryptocurrency Exchange Association). All of them are otherwise licensed by Japan’s FSA (Financial Services Agency).
Taizen Okuyama, the CEO, and president of Money Partners, a publicly traded exchange company, is also aboard. He will serve as the chairman of the same group. He stated that along with 15 other companies, the JCEA had its first formal meeting on Monday, April 23rd.
The group united all of the licensed exchanges working in the country and will get to work on developing the rules for their operations. These will include customer protection as well as internal controls, while it will also seek compliance from the companies which are included. On the other hand, penalties will be set up to punish any activities that undermine the overall integrity of the country’s cryptocurrency industry.
Okuyama said that they will make sure that internal control and security measures are in place. This should begin to eliminate the user concerns when it comes to the health of the crypto market. The growing organisation should then help with the process of reestablishing a full level of public confidence in this industry.
A Shaken Domain
Saying that the public trust was very strong in the crypto market would be a gross overstatement. From the first day, the same public has been provided with a mass media bias which skews the concept of the basic workings of any cryptocurrency. Naturally, the same did not lead to a general confidence in the cryptocurrency market and the results of that are very evident now.
Cryptocurrencies, like many digital ventures, including eSports, social media, and many others are directly tied to their reputation. The recent Facebook scandal clearly shows this to be true. In Japan, the hack that left the Coincheck exchange with missing NEM tokens worth $500 million absolutely shuttered the hard-build image in the country.
Additionally, Japan has an additional dozen or so digital currency exchanges that work without the full FSA license, which is also something that causes an issue for the crypto space in the country. JCEA will work on these problems in hopes of finding a solution not just for the acute issues, but also on broader trust building that the group recognizes as something lacking in the land.
An Example for the rest of the World
The case of JCEA being formed is a good example of a forward-thinking community that has grown up in Japan. However, the problem of lack of public trust is something that is endemic in the rest of the world as well.
The idea can be seen in any number of countries and their state of development does not make a big difference – it looks like that everyone is united in their skepticism about this industry. What JCEA did and plans to do is a great sign for other countries with a developed exchange scene – the exchanges must come together and find a way to self-regulate.
The government response to the question of regulation will come sooner or later, but it will come everywhere. No business venture working in crypto can hope to avoid it, so a proactive attitude should be a much better alternative than the widely used wait-and-see.
The Industry that must Move
The time for waiting and watching has passed – the hard times are here. The businesses must act even though this will not stop the regulators. However, there is a world of difference between ending up being regulated and working with regulators on setting up better rules.
Here, like always, the strength is in numbers if the exchanges accept to work together. Aside from sharing resources and information, they can present themselves as a serious block of a growing branch of industry. This also allows them to present more influence in the regulatory game that bridges economy and politics.
Also, it is important to underline that having self-regulation shows the public that the same industry is willing to change to accommodate better rules for everyone. As this process develops, more and more individuals, but businesses as well will begin to recognize this field as trustworthy.
Bitcoin and every other cryptocurrency, just like any other crypto-based venture, will also gain plenty from this. Right now, the important this is for the exchanges to start organizing themselves and creating a plan for all of this.