The Japanese financial regulator has imposed five new criteria for all cryptocurrency exchanges operating in the country. These rules apply to existing exchange operators as well as new ones applying for registration for the first time. On-site inspections will be conducted on all exchanges prior to approval.
Preventing Coincheck 2.0
The Japanese Financial Services Agency (FSA) has set new rules for the registration of cryptocurrency exchanges, Nikkei reported on Sunday. The agency aims to promote compliance and protect customer assets as well as “forestall another digital currency heist like the Coincheck scandal,” the news outlet added.
Coincheck, one of the largest crypto exchanges in Japan, was hacked in January and lost 58 billion yen (~US$531 million) worth of the cryptocurrency NEM. The exchange has since been acquired by a leading online brokerage firm, Monex Group.
An FSA official explained to Nikkei that in addition to documentation, the registration process would now include preliminary visits to ascertain how the exchanges operate. The publication elaborated:
Exchange operators registering with the government will now need to satisfy five broad criteria.
The Five Criteria
The first of the five criteria concerns system management. The agency will ensure that exchanges “will not store currency in internet-connected computers and will have to set multiple passwords for currency transfers,” the publication detailed.
Money laundering preventative measures make up the second criterion. Exchanges “will need to work harder to prevent money laundering, through such means as verifying customer identification for large transfers.” […]