THE Japanese Financial Services Agency (FSA) are in the midst of introducing stricter standards for cryptocurrency exchanges to uphold.
Still scarred from the recent Coincheck heist, the agency is taking a more proactive stance and will make an attempt to put an end to any future exchange heists before they’ve even been planned.
A spokesperson from the FSA said: “We need to introduce a new perspective in reviews of registrations.”
This process will include visits and in depth investigations into the exchanges, as well as having vast amounts of information on the operators of these exchanges.
Japan had been known to support this ever-growing industry, its main priority at the moment would be more on compliance and the protection of consumers.
Exchanges and their operators will now be expected to meet five areas of criteria once they register with the government.
This Criteria include:
- Exchanges must not store currency on internet connected computer and have multiple passwords in place for currency transfers.
- Have systems in place to prevent money laundering, such as having a way of verifying a customer’s identity before large transfers are authorised.
- Customer assets must be managed separate to exchange assets, accounts must be checked several times per day to ensure there are no signs of diversion.
- Restrictions will also be placed on what types of crypto can be traded/sold by government registered exchanges. Any privacy coins will be banned.
- Lastly, Internal regulations will be put in place by the FSA, operators will be required to have managers that have no connection to the companies shareholders, this will stop exploitation of the systems for personal benefit.
This new five-point standards framework will allow the FSA to handle these exchanges and the investigations of them be more in-depth.
This will also allow the FSA to identify potential risks in advance, in order to more effectively combat them.
An FSA source said: “Without the necessary know-how, we’ve been feeling our way through the dark on how thoroughly we should check these different aspects.”