Here is the rewritten article in Markdown format:

Cryptocurrencies and Financial Crime: Japan’s Regulatory Crisis Deepens

Tokyo, Japan - The Japanese government’s experiment with self-regulation of the cryptocurrency industry has spiralled into crisis, leaving financial regulators and industry insiders sounding the alarm over a lack of progress in anti-money laundering regulations and infighting among exchange operators.

The Japan Virtual Currency Exchange Association (JVCEA) at the Centre of the Controversy

Established in 2018 to oversee the country’s multibillion-dollar virtual asset business, the JVCEA has been criticized by regulators for poor governance and chronic under-resourcing. Industry insiders have reported that staff even formed a union to protect themselves from management decisions.

Regulatory Vacuum Allows Financial Crime to Flourish

According to industry executives, lawyers, and current and former financial regulators, Japan’s approach to cryptocurrencies has led to a regulatory vacuum that is allowing financial crime to flourish. The country’s Financial Services Agency (FSA) has repeatedly criticized the JVCEA for delays in implementing crucial anti-money laundering regulations.

FSA Concerns Over Communication Breakdown

The FSA has also expressed concerns over the lack of communication between JVCEA directors, its secretariat, and member operators, resulting in poor management of the organisation. The JVCEA has acknowledged delays in approving digital coins due to a lack of skilled staff, but denies any intention of favouring more established exchanges.

Industry Insiders Fear Loss of Global Centre for Virtual Asset Trading

The crisis has sparked concerns among industry insiders that Japan’s pioneering status as a global centre for virtual asset trading is at risk. The country was one of the first to recognize cryptocurrencies as financial assets and establish a system for licensing crypto exchanges.

Concerns Over Anti-Money Laundering Regulations

“We’re very worried about the current situation,” said Meiji University professor and JVCEA board member Masao Yanaga. “The regulators have pushed to establish anti-money laundering regulations, but the industry has been taking its time to work on it.”

Industry experts warn that the lack of progress in anti-money laundering regulations is creating an environment conducive to financial crime. “There’s a very strong request from the FSA to move on this,” said Yanaga. “But without international agreements on sharing customer data between exchanges, it’s hard to implement these rules.”

Labour Union Demands Change

The labour union formed by JVCEA staff has published demands for the removal of top figures at the organisation and better working conditions.

Conclusion

As the crisis deepens, industry insiders are left wondering whether Japan’s bold experiment with self-regulation will ultimately prove successful or become a cautionary tale for other countries considering similar approaches.