- The Japanese Financial Watchdog has set out new regulations for cryptocurrency exchanges.
- The regulations put measures in place to protect investors.
Japan: Latest report reaching Cryptona.co revealed that Japan’s Financial Services Agency (FSA), which acts as the Japanese financial watchdog, has set out new regulatory stipulations for domestic cryptocurrency exchanges.
Japan’s Financial Services Agency is reportedly heightening its efforts to avoid a repeat of the Coincheck cryptocurrency exchange $532 million hack incidence that happened in January, the largest single exchange hack ever.
A source from the Japanese financial watchdog told Nikkei Asian Review – a local news outlet – that the watchdog has always been faced with the challenge of identifying potential risks in advance. The source also told the news outlet that “without the necessary know-how, we’ve been feeling our way through the dark on how thoroughly we should check these different aspects.”
However, the new regulations necessitate measures to protect investors and attempts to rehaul exchanges’ internal management systems. Nikkei stated that crypto exchanges are now required to monitor client’s accounts several times per day for suspicious fluctuations, manage customers’ assets separately from those of the exchange, and store cryptocurrency holdings on offline wallets only. Crypto exchanges will also face tougher anti-money-laundering (AML) measures, which require know-your-customer (KYC) checks, such as ID verification, and multiple password protections for large transactions. The regulations also ensure that registered crypto exchanges will now face strict restrictions – like getting a ban by trading anonymity-oriented altcoins such as Monero and Dash.
Nikkei further reported that the Japanese financial watchdog will send inspectors to both old and new operators to check their compliance with the new regulations.
Cryptona.co had reported last month that a new self-regulatory body was created for Japanese crypto exchanges to provide assistance for domestic exchanges and protect them against a recurrence of what happened to Coincheck. Also, Kraken, an international cryptocurrency exchange announced that it would be ending its services in Japan due to increasing costs of operations.