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Japanese make stricter regulations for registered cryptocurrency exchange

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Japanese make stricter regulations for registered cryptocurrency exchange

Japanese make stricter regulations for registered cryptocurrency exchange. According to Nikkei Asian Review, in an effort to prevent anymore heist like the one that befell Coincheck in January, Japanese regulators have announced stricter regulations for cryptocurrency exchange.

This summer, the country’s Financial Service Agency expects to begin the use of the new and stricter framework for registered cryptocurrency exchanges.

The new and the old operators will be required to meet the new standards. Failure to which, they will be advised to discontinue operations.

New Focus

After initially recognizing virtual currency as a valid form of payment, the government has shifted its focus to consumer protection.

In April, the agency stated that the new process needed for cryptocurrency exchange will be extended from simple documentation with an onsite investigation of how the operations are managed.

New Requirements Established

There will be harsher standards on system management of cryptocurrency. It will include: ·

  • Not storing of currency in internet-connected computers.
  • having multiple passwords for currency standards.

The exchange also must maintain a standard to avoid money laundering by

  • Verifying customer identification for major transfers. ·
  • Keeping customer assets separate from exchange assets.
  • Monitor customer account balance on daily basis for a sign of diversion.
  • Rules should be in place to prevent their officials from using client frauds. 
  • New rules for types of currency used at a registered exchange. ·
  • High degree of anonymity will not be allowed to avoid money laundering.

A Two-Step Process

Operators will have to submit documents to register exchanges with FSA. After the review of the documents, the agency will send inspectors to visit the exchanges that pass the screening to examine their operations and verify the number of employees.

Because of limited expertise with exchanges, the agency has been “feeling our way through the dark on how thoroughly we should check these different aspects” an unnamed agency said. With the help of the new system, the agency will be able to conduct a detailed assessment and identify risks ahead of time.

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