Japan Strengthens Crypto Exchange Regulations To Prevent Another Coincheck Heist
According to Nikkei Asian Review, Japan regulators have revealed that they are strengthening crypto exchange regulations in order to stop criminal activities similar to the one that occurred on Coincheck back in January.
The country’s Financial Services Agency hopes to implement a more rigid framework for registered cryptocurrency exchanges this summer and warns those who do not want to abide by these new rules to stop all operations. All existing and new operators are to go in line with this new standards.
The government has a new focus to strengthen the safety of consumers after it came to recognize the fact that cryptocurrencies are a legal form of payment in the interest of supporting the changing technology.
In April, the agency noted that the new processes are required for cryptocurrency exchange registrations that go beyond simple documentation to add onsite investigations of how the operations are run.
The new requirements established will now mean that cryptocurrency exchanges will see stricter standards on system management. This will include not keeping currency on the internet-connected computers and having several passwords for currency standards.
Exchanges will also have to make more efforts on their verification processes to prevent criminal activities by making sure of customer identification for major transfers. Exchanges will also have to keep track of customer account balances during several times of the day for signs of diversions in order to separate customer’s assets from exchange assets.
Exchanges will additionally have to put new measures in place to stop their officers from using client funds.
Furthermore, new rules will be made to determine the types of cryptocurrencies to be used at registered exchanges.
There will also be rigid internal rules to differentiate management from exchanges. The roles of system development will also be separated from those of asset management to ensure that employees do not manipulate the system for personal interest.
