Japan enhances risk settings for crypto-exchange registration
Japan has raised its risk assessment of the crypto-exchange sector, increasing scrutiny of the registration process to ensure appropriate risk management is in place.
The Financial Services Agency (FSA) has upgraded the exchange registration process under a revision of the Payment Services Act of April 2017 that stipulates exchanges must uphold appropriate risk management.
The revised act also increases by about fourfold the number of questions asked in screening applications for exchange registrations. Screening questions now number about 400 under the new rules.
The regulator is also seeking more transparency from the exchanges: from boardroom strategy discussions to access to customer information and composition of shareholders, the FSA intends ensure it can make appropriate “checks for links to antisocial groups”.
The Japan Times reported that to register, a cryptocurrency exchange must now “submit minutes of board meetings so it can check whether enough discussions have been held about measures to sustain the company’s financial health and ensure the security of its computer system”.
The FSA has been seeking to crack down on crypto-exchange risk management following a spate of high-profile thefts and scams this year – including the $532m hack of Japan’s CoinCheck exchange.