Following the hack of coincheck and the investigations that show numerous insufficient security controls of multiple exchanges, in efforts to overcome these difficulties the Japanese financial regulator has revised its rules and procedures for administering virtual currency exchanges. The Japanese authorities stress that its objectives are to restructure the virtual currency sector.
Exchange review process strengthen
According to a local media outlet, the Japanese Financial Services Agency (FSA) has apparently reinforced its rules and procedure for accepting the registrations of virtual currency exchanges.
The FSA, as indicated by Sankei Shimbum “will strengthen the registration review” procedure for firms that have not been accepted but have applied for registration. These firm called “quasi-operators” of cryptocurrencies have been permitted to conduct business whilst their registrations are under revision.
According to the news outlet, the agency will undergo an on-site investigation, for exchanges that pass the first assessment procedure, adding that:
As a result of the inspection, it is a policy of the FSA to strongly seek ‘withdrawal’ from exchange companies that do not show improvement.
Ever since the hacked exchange applied for a license in September of last year, but was permitted to keep operating as a quasi-operator, hence the procedure will aid the avoidance of such occurrence from happening to exchangeS such as the case of Coinchecks. Recently, Money Group has acquired Coincheck.
Restructuring the virtual currency sector
After inspecting all quasi-operators and revealing numerous insufficient security controls across multiple exchanges, the FSA has strengthened its rules in efforts to provide solutions. Some exchanges were ordered to suspend their business activities and also five firms have already withdrawn their applications, consequently.
Additionally, on Friday the agency announced that Campfire another agency is also showing signs of withdrawing their application from the agency, as reported by Jiji Press.
Tech Bureau, Quoine, and GMO Coin are among the exchanges that have been inspected and given licenses by the agency, as indicated by the news outlet. Business improvements orders have already been received by Tech Bureau and GMO Coin from the agency.
The FSA also elaborated that they primarily assess the system of safeguarding clients, as well as the auditing function, which they are not aware of by reporting only, “Whether they are exercising corporate governance by properly separating management and execution.”
In addition, more than 100 firms are said to be preparing to get in the virtual currency exchange industry, as sighted by the Sankei Shimbum. This includes the operator of the world’s most popular chat apps, line, known as Line Corporation.