Despite Japan being a relatively lax and welcoming nation when it comes to cryptocurrency dealings and the bitcoin, there is still much to be done in terms of regulatory frameworks. Tokyo GateWay and Mr. Exchange have withdrawn their applications to register with the Japanese Financial Services Agency (FSA) as digital asset exchange operators.
It’s worth mentioning that both of these exchanges were ordered by the FSA to work on their security protocols and client asset safety on March 8th.
Both of the aforementioned exchanges will return funds to their clients and halt all operations, according to Nikkei.
FSA inspections cause exchanges to shut down.
The FSA is mostly concerned with the security being offered by cryptocurrency exchanges in Japan, which should come as no surprise after Coincheck was hacked for over $500 million.
There is a law in Japan that kicked into effect last April. The law requires all digital assets within the country to register with the FSA. So far, 16 exchanges have gone through with their registration. While the FSA has allowed another 16 to carry on with their exchange operations while their applications are under review.
Tokyo GateWay and Mr. Exchange were part of the 16 that were allowed to carry on while they were under review. Peculiar that they withdraw their applications is it not? Coincheck also falls into that group.
Further FSA crackdown.
Following the Coincheck situation, the FSA started conducting on-site inspections of all of the exchanges that were pending verification. These exchanges need to have the same level of security as do the other ones approved by the FSA.
However, the inspections carried out by the FSA have so far uncovered issues regarding internal controls, security, and governance. What’s nice about this situation is that the FSA has allowed exchanges to voluntarily close their doors before being ordered to do so.
While the exchanges themselves, as well as their clients, might be annoyed by the FSA’s crackdown. However, exchanges with maximum security are a necessity. So, if a few platforms get shut down. Good, because ultimately the safest ones will remain – resulting in clients being assured that their assets are safe.
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