Covesting
Contributor
Japan’s Financial Services Agency has added new parameters to crypto exchange regulations.
Ever since the Japan-based cryptocurrency exchange Coincheck was hacked to the tune of $500M in NEM tokens, the cryptocurrency industry has been under increased scrutiny by Japan’s regulatory entity the Financial Services Agency (FSA).
The FSA has put exchanges under the microscope, and has issued warnings to exchanges failing to bolster its cyber security measures, while suspending others for more glaring compliance issues. The watchful eye of the FSA has caused some exchanges to cease operations entirely and shut up shop. Others have fled for more crypto-friendly countries.
As a result, a new self-regulatory body called the Japanese Cryptocurrency Exchange Association was formed to provide additional oversight over exchanges in the region.
After rumors of Japanese regulators targeting privacy-focused coins, Japanese newspaper Nikkei is reporting that the FSA has again laid out new regulatory stipulations for exchanges operating in the country. According to Nikkei, exchanges are now required to monitor customer accounts many times per day to search for any red flags or fluctuations. In addition, exchanges must manage client assets separately from those owned by the exchange. Assets must be stored on offline, cold storage systems only. Lastly, the FSA is imposing even stricter know your customer and anti-money launching checks like ID verification.
Exchanges must also delist privacy-focused alt coins, as rumors had previously suggested.
The FSA has inspectors en route to both new and already existing cryptocurrency exchanges to ensure new compliance measures are being implemented and abided by.
Covesting thinks this is a good move, as crypto exchanges will become more legalised and reliable, and this will have a positive contribution to the cryptocurrency industry in general, it will no longer be perceived as scam.
