Today Japan’s Financial Services Agency (FSA) has punished seven crypto exchanges for failing to comply with financial services security rules. Officials has said that the matter concerns the lack of proper internal audit systems in the exchanges and the absence of mechanisms for detecting suspicious transactions with cryptocurrencies. According to the regulator, most exchanges do not have the necessary systems to fight money laundering and the financing of terrorism (AML systems). In the future, FSA will begin the work to ban the activities of 16 non-registered crypto exchanges.
Two crypto exchanges (Bit Station and FSHO) will have to suspend their work for the time of monitoring and elimination of the detected violations. The well-known Coincheck exchange has escaped with slight shock. Until March 22, its management must provide the agency with a detailed report on ways to improve the work of the exchange. The regulatory body has demanded the introduction of mechanisms to prevent cryptocurrency theft. It should be recalled that on January 26, 2018 Coincheck was hacked, which led to one of the most massive thefts in the history of cryptocurrency.
It is important to note that the founders of Coincheck has assured the public that the activity of the exchange will soon be brought into compliance with the requirements of Japanese legislation. Specialists are already working on the implementation of mechanisms that ensure the security of business operations.
As you can see, the Japanese government has shown its strict position with regard to the security of the cryptocurrency market. At the same time, these regulatory actions are likely to lead to positive consequences. We believe that the cryptocurrency market drop occurred against the backdrop of statements about state interference in the activities of exchanges, is only a temporary phenomenon. In the future, increasing the security of cryptocurrency transactions in exchanges should increase the flow of capital into this relatively young market. So be far-sighted and do not panic.