Japan’s Financial Service Agency (FSA) has reviewed the law guiding registration of new cryptocurrency exchanges in the light of recent security challenges in the industry. After careful analysis of several Japanese based cryptocurrency exchanges, the FSA several security loopholes which allowed incidence like the notorious Coincheck hack in January this year.
The FSA disclosed that the primary aim of the law revision is to rebuild the cryptocurrency industry and provide adequate security measures. Local news outlet, Sankei Shimbun reports that the revision is intended to “strengthen the registration review process” for “quasi-operators”. Quasi-operators–those who have applied for registration but are not yet approved–will be subject to more rigorous checks including an on-site inspection. They will however still be allowed to continue trading while which their application is reviewed.
A Review to checkmate attacks on Cryptocurrency Exchanges
The regulatory agency believes that after implementation of this newly revised law, situations like the Coincheck hack would be checkmated. The agency also disclosed that if any exchange passes the initial examination process, the FSA would conduct a thorough on-site inspection. However, according to FSA policy if any exchange does not show commitment to improving its security framework it would be required to withdraw.
According to the News source, over 100 different cryptocurrency firms are intending to enter the exchange business nevertheless five in accordance with the revised law, Campfire and five other exchanges have withdrawn their applications and were instructed to cease operation. Other exchanges to have successfully passed the initial examination process includes Quoine, Tech Bureau, and GMO Coin and have successfully undergone inspection.
Previously against operating in the country without proper registration. The agency reported that Binance has been conducting financial transactions in Japan through the internet without a proper license.
Japan is probably the most crypto-friendly nation, going ahead to legalize cryptocurrency businesses when most countries either ban them or stay neutral. Initial Coin Offerings, the crowdfunding process popular with crypto projects may soon become legal in Japan as a notable group of Academic researchers gave their support to calls for legal ICOs in the country. Asia-based industry expert believes this is the first step to getting full government approval on ICOs and cryptocurrency related activities.