Japanese Regulators Set To Shutter Non-Compliant Cryptocurrency Exchanges
Since $500 million of NEM was stolen from the Coincheck exchange in January, Japan’s Financial Services Authority (FSA) has vowed to improve standards in the country’s cryptocurrency exchanges. As part of this new vigilance a set of punishments are expected to be handed out this week to non-compliant exchanges.
Japan had been operating a relatively loose regulatory regime until the Coincheck hack, but a series of exchange failures prompted it into action. The FSA has been conducting inspections of the country’s exchanges, paying particular attention to their procedures regarding money laundering and customer protection.
According to the Nikkei Asian Review, the FSA is now ready to levy a series of punitive measures on a number of exchanges which are failing to achieve the necessary standards. Most seriously, some will be subject to suspension orders, preventing them from conducting further business activities until all holes are plugged.
Of Japan’s 32 exchanges, 16 are regulated by the FSA with the remainder, which includes Coincheck, under review. It is believed all the failing exchanges are from this latter group. As well as the suspended exchanges, others will be hit with administrative punishment notices. It is also rumoured that the FSA are ready to issue Coincheck with a second business improvement order.
Meanwhile, the Coincheck hack has also prompted a self-regulatory response from the industry itself. Two trade groups representing the regulated exchanges — the Japanese Blockchain Association and the Japan Cryptocurrency Business Association — have finally merged, with the resulting body empowered to ensure its members stay compliant.
Provided the body is approved as an independent regulator it will be able to set which cryptocurrencies are available for trading in its exchanges. This will allow for the exclusion of coins particularly used in money-laundering or fraud. For new chairman Taizen Okuyama, this is an opportunity to “bring the entire cryptocurrency sector to bear on self-regulation“.
Image From Shutterstock