Sofiko is a freelance fintech copywriter at Coinspeaker. With a Bachelor degree in International Business and Economics, Sofiko has been deepening her knowledge of an agile innovative industry primary focusing on the robust blockchain technology and cryptocurrencies. As a bank employee, Sofiko particularly keens on crypto and blockchain integration into the established banking systems.
Japan’s Financial Service Agency has forced one of the biggest Bitcoin exchanges bitFlyer to cease new account registrations due to inadequate AML/KYC requirements.
By now bitFlyer is one of the world’s largest cryptocurrency exchanges that contributes 25 percent of the global trading volumes. As previously reported by Coinspeaker, last year bitFlyer appeared to be amidst 11 Japan’s exchanges granted with the trading licenses issued by Financial Service Agency (FSA). Further, the exchange has successfully expanded its service to the United States and Europe, eventually making a 250 billion worth turnover of cryptocurrencies.
However, today’s announcement has tarnished the bright future of bitFlyer. From the very nascent days of the crypto-based marketplace, Japan has remained the hot spot for cryptocurrency trading, gradually shifting its stance toward tighter controls.
Since earlier this year, the Japanese government and local authorities have continuously cracked down on anonymous cryptocurrencies Monero, Zcash, and Dash, and the usage of digital assets in financing malicious activities such as drug trafficking and money laundering.
In attempts to stop the usage of anonymous cryptocurrencies, the Japanese financial authorities asked the Financial Action Task Force (FATF) to implement unified crypto regulations to oversee digital asset exchanges internationally with the same standard and policies.
As a result, the Japanese FSA has requested five registered and approved cryptocurrency exchanges in the country including bitFlyer to overhaul its internal systems, after discovering severe flaws in the internal management systems of the exchange that handle its AML (Anti Money Laundering) and KYC (Know Your Customer) processes.
In respond to allegations, bitFlyer apologized to its customers and said it would exert every effort to address the regulators’ findings. In statement, the exchange also stressed its deep understanding of sensitivity of the raised issues.
bitFlyer is now to review all current customers’ identification documents and may ask some of them to undergo through the identification process again. It is set to submit its plan for improving to the Financial Services Agency by July 23.
In the meantime, all new account registrations are temporarily suspended until “the review of the status of identity confirmation to existing customers is completed and the internal control system is strengthened.”
Nevertheless after closer examination of the imposed list of requirements, one may notice that some of them concerning just identification but a range of matters, including information safety and transactions records.
Notably the improvement order bitFlyer has received by Japan’s Financial Services Authority (FSA) only applies to the Japanese branch and does not affect the EU or US Bitflyer branch.
Being the first country to establish Bitcoin as a legitimate payment method, Japan has serious impact on the price of major cryptocurrency, since in-between of two-thirds and three-fourths of Bitcoin trading is yen-denominated.
Thus, the price of Bitcoin fell sharply minutes after the FSA announced its order and currently the cryptocurrency is trading for $ 6 178,50 per unit, according to data from CoinMarketCap. Its low for the year came in early February at just under $6,000. After surging nearly 1,400% at the end of last year, Bitcoin has lost more than half its value in 2018.
Other cryptocurrencies fell alongside Bitcoin on Friday. Ethereum, the second-largest cryptocurrency by market cap, drop nearly 10 percent, while Ripple was down 7 percent. Bitcoin Cash and Litecoin both lost about 12 percent of their value.