Japan’s regulators have welcomed bitcoin businesses more than most, but it comes at a price. After playing host to two of the largest crypto-hacks in history, the nation is especially concerned about consumer protection. Now, regulators there say they’ll punish any cryptocurrency exchange that fails to assist or financially protect its customers.
Japan Doesn’t Want Any More Bad Press
The debacles of Mt. Gox and Coincheck haven’t been forgotten, and many are still dealing with the consequences. No doubt, Japan is feeling international heat after both events took place on its soil, and regulators are seeking to place matters into stronger hands.
After discovering many flaws in consumer protection services and money-laundering measures in various cryptocurrency exchanges, Japan’s Financial Services Agency (FSA) is targeting exchange platforms and rolling out penalties accordingly, to ensure another disaster doesn’t ensue.
Right now, the message is clear: exchanges are required to raise their standards, or they’ll be forced into indefinite suspensions. At press time, the FSA hasn’t named any specific exchanges in danger of this, though it’s presumable Coincheck is among them. Notices will be sent out later this week warning trading companies of Japan’s tougher sentiment.
Regulation Is Getting Tougher
Last year, Japan became the first country to nationally regulate digital currency companies. 16 exchanges currently have licenses from the FSA; 16 others are being allowed to operate while regulators “assess their applications.”
Last week, the 16 regulated bodies joined together to form a single voluntary association, designed to implement stronger security tactics for crypto-traders and exchange customers. While not yet officially named, the organization will be headed by Money Partners’ Yasunori Okuyama and bitFlyer’s Yuzo Kano, who will serve as chairman and vice-chairman respectively.
“This is a turning point, where the industry becomes one,” Kano mentioned in an interview.
Not Quite There Yet
It’s a move in the right direction, but other exchanges are failing to make the cut. Coincheck, for example, has sworn up-and-down that customers affected by the recent hack will have their funds replaced. However, executives have failed to provide a date as to when customers can expect reimbursement.
The FSA is monitoring the exchange’s progress in this department, and stated that it currently has sufficient funds to provide for customers that have suffered monetary losses.
In addition, Tokyo-based GMO Coin and Zaif in Osaka are being singled out by the organization, which is requesting that the exchanges “improve their business” before it’s too late.
Last month, Zaif was the object of widespread speculation when a glitch in the company’s systems allowed seven customers to purchase bitcoins at no charge. While the transactions were stopped and the buyers have not attained any profits, the event ultimately gave rise to further security concerns regarding Japanese crypto-trades.
Can we expect stronger regulation in the coming months in Japan? Post your thoughts below.
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