After Coincheck exchange (a wallet and exchange platform based in Tokyo Japan) lost over half a billion worth of NEM tokens, with victims suing the cryptocurrency brokerage firm, the Japanese government (known for recognizing Bitcoin as a legal tender) has now moved to inspect over 15 unlicensed cryptocurrency trading and exchange platforms.
As quoted by Japan Times at a news briefing, Taro Aso (Japan’s financial services minister) mentioned that the inspection will be conducted on service providers with a filed but unapproved license. Taro Aso further stated that the inspection will also include the technical safety procedures of each exchange, with an examination of how each of the 15 exchanges manages user funds.
Crackdown on Unlicensed Crypto Exchanges
According to reports by Coindesk, Japan’s financial services agency had previously issued orders to have all the country’s cryptocurrency exchanges report their level of security protocol as well as their capacities for protection against cyber attacks. This move was prompted by the hack that saw Coincheck lose more than $500 million worth of NEM tokens. For unlicensed exchange operators, Japan’s Financial Services Agency (FSA) has decided to only conduct on-site inspections, especially for unlicensed or unapproved crypto exchanges.
This comes just about ten months after the country’s recognition of cryptocurrency as a legal form of payment, with the FSA giving leeway to most unapproved exchanges including Coincheck to operate while the review processes were ongoing.
Is Japan Taking a Stricter Stance?
Another report from Nikkei that came out on January 29th 2018, indicated that the financial watchdogs had ordered Coincheck to investigate its security vulnerabilities and issue out the report detailing planned management improvement, as the FSA said,
Inappropriate management of system risks had become the norm at Coincheck
The move by FCA is probably the first time Japanese financial regulators have come out and warned cryptocurrency companies about security risks, as the FCA equally warned a foreign cryptocurrency firm for issuing unlicensed financial instruments earlier this week
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Do you think there will be stricter regulation of cryptocurrency exchanges after the hack at Coincheck? Share your thoughts and opinions with us in the comments section.