By
Mayowa Adebajo
February 19th, 2024
The Financial Service Agency has cracked the whip on seven exchanges for failing to comply with anti-money laundering and security procedures.
Ever since the $500 million hack of Japan’s Coincheck cryptocurrency exchange came to light earlier this year in January, Japan’s financial watchdog The Financial Services Agency (FSA) has been seen cracking down the whip on local cryptocurrency exchanges. The FSA has been performing surprise visits and checks to crypto exchanges to make sure that the exchanges have taken necessary security measures in order to protect the investor’s money.
On Thursday, Japan’s Financial Service Agency (FSA) has issued a month-long suspension order to cryptocurrency exchanges – Bit Station and FSHO. As reported by the Nikkei Asian Review, the FSA discovered that a senior staff member of Bit Station had diverted customer’s Bitcoins for personal use.
Five other cryptocurrency exchanges – Bicrements, GMO Coin, Mr. Exchange, Coincheck and Tech Bureau have been all affected by the business improvement orders passed by the FSA. All of these exchanges have been warned and asked to improve their system security measures and submit a written plan of improvement by 22nd of March, this month.
Moreover, the FSA’s recent crackdown has also uncovered how the digital currency exchanges fail to comply with the anti-money laundering procedures set by the agency while employing ill-trained staff at their places. Currently, there are a total of 32 digital currency exchanges operating in Japan of which 16 have received official licenses by the government agencies last year.
However, due to the crypto-friendly nature of the government, the rest of the exchanges, which includes Coincheck, have been allowed to function on the provisional authorization as they existed before the passing of the law that required registration, and were allowed to trade until their applications are being processed.
The FSA said that these unregistered cryptocurrency exchanges have been majorly problematic. The FSA says that all those who have been currently penalized have either the choice to obey the agency’s requirements and complete the registrations or withdraw their applications which indirectly means moving out of the crypto business.
In addition to the announcement, the FSA has also created a cryptocurrency exchange industry study group which aims at examining institutional issues relating to cryptocurrencies. According to the FSA, members of this study group will come from several established academic institutions, crypto exchanges as well as government agencies as observers. According to the statements, the FSA itself will play the role of the secretariat.
It seems that the FSA is taking every measure to ensure that no more security lapses, at the end of the exchanges, appear in times to come ahead.