Japan Cracks The Whip On Cryptocurrency Exchanges
Financial regulators are reportedly planning to suspend some cryptocurrency exchanges and issue notices for administrative punishments against some of the exchanges.
The punishments to be issued highlight the decision by the regulatory authorities to take action against numerous exchanges for failing to put in place adequate measures that prevent money laundering and anti-hacking measures. The details were disclosed by sources familiar with the matter and they claim that the decision by the Japanese regulators is part of their reaction to the latest crypto exchange hacks.
Coincheck is the latest victim of a hack which took place in January leading to the loss of huge sums of money. Japan’s Financial Services Agency upon investigations discovered that some of the exchanges had inadequate customer protection measures. The Japanese regulator did not reveal the names of the crypto exchanges that will be subjected to the punishments and there was also no mention of what types of punishment will be involved.
It has been speculated that Coincheck will most likely be one of the companies that will be subjected to the punishment and notified to make adequate security improvements especially following the January hack. The latter led to the loss of about 500 million NEM tokens which were stolen from crypto wallets through the platform.
The FSA announced on Thursday that it called for the suspension of Bit Station and FSHO crypto exchanges and that the suspension period will last one month. The Japanese regulatory body did not make any public comments regarding the matter. However, it looks like the measures are part of its plans to carry out better regulation with the aim of improving the quality of financial regulation.
The Japanese watchdog points out on its website that: “We have been engaged in various efforts to achieve better regulation.” The FSA vowed to investigate all the cryptocurrency exchanges after the Coinbase hack to determine the strength of the measures put in place by the exchanges. Sources familiar with the regulator's undertakings claim that it has been pushing the exchanges to employ more security measures to protect their customers.
Hackers have been a major threat to cryptocurrency exchanges especially since they present the only place where hacks can access a variety of crypto assets. This is on account of the fact that blockchains are virtually unhackable and the only way to access cryptocurrencies is through cryptocurrency wallets usually connected to the exchanges.