Japanese financial services Agency (FSA) intends to introduce more strict rules for cryptocurrency exchanges. As reported by Japanese media, the FSA thus hopes to prevent another major break-ins.
We will remind, in January 2018 was hacked Japanese exchange Coincheck, which led to the theft of the cryptocurrency cost more than $500 million After this incident, the FSA has made considerable efforts to ensure security on cryptocurrency arena.
In recent years Japan has established itself as a nation that a very friendly attitude towards digital currencies. Strict new measures the FSA is not intended to deviate from this course. On the contrary, the Agency seeks to revitalize the market, to protect investors and to prevent money laundering. With this aim, the FSA has launched a new program of five points which will help properly regulate the cryptocurrency market.
First, the cryptocurrency exchange platform will adhere to the highest standards of safety. Thus, it is intended to eliminate the broad practice of storing money in online wallets, and to introduce two-factor authentication (2-FA) for foreign currency translation. As we know, when storing the online currency can fall into the hands of hackers, and 2-FA prevents unauthorized transfer of funds.
Second, cryptocurrency exchanges must implement security procedures KYC (“know your customer”). This step aims to exclude money laundering. To this end, the courts will have to implement mandatory protocols identification of their users, making major cryptocurrency transactions.
Third, the FSA will require exchanges of best practices of asset management. Customer funds must be managed separately from corporate assets sites. The platform needs to check daily balances on customer accounts to prevent any manipulation. FSA also insists that the system exchanges did not allow employees to make unauthorized transactions, using the funds of users.
The fourth item concerns the restrictions on specific types of cryptocurrencies. Have FSA is already black list “too private” coins, providing complete anonymity, which allows their use for money laundering. Officially registered platform will not be able to impose such cryptocurrencies in their listings.
The fifth paragraph of the programme covers the structure of stock exchange platforms and their work. FSA calls for clearer organizational structure of these companies. For example, under the new rules shareholders can be admitted to the leadership. In addition, developers and asset managers also need to be separated: this will prevent insider trading and other forms of internal manipulation.
A source from the FSA said that now the Agency intends to adhere to the “more practical” approach to the regulation of cryptocurrency exchanges, with an emphasis on careful inspection of various aspects of their activities.
The FSA also plans to examine in detail the registration documents submitted by the platforms. After that, the Agency plans to send inspectors to assess the systems and protocols in the field.
It is expected that the FSA will launch its programme of five points when receiving applications for registration, and will apply it to existing platforms.