Japan’s self-regulatory exchange group to tighten rules on asset storage
More self-regulatory news, this time from Japan, as its Virtual Currency Exchange Association (JVCEA) plans to make asset management measures more strict for the country’s digital exchanges.
So-called “informed sources” told the Japan Times this weekend that self-regulatory efforts would need to be tightened following the hacking of the Zaif Exchange last month.
Hackers targeted Zaif, wholly-owned by Tech Bureau, on 14 September and during a two-hour attack looted around Y7bn ($62m) mostly in bitcoin and bitcoin cash.
However, Tech Bureau didn’t spot the theft until three days later after discovering server problems, finally confirming it was hacked on the 18th.
FSA business improvement orders
This prompted Japan’s Financial Services Agency (FSA) to slap a business improvement order on Tech Bureau last week – mandating the company to tighten up security.
This was the second time the exchange had been issued such an order. The FSA issued a further five such orders during March, on BitFlyer, BitBank, BitPoint, BTCbox and Quoine.
Measures set be taken by the JVCEA are likely to include setting a ceiling on the amount of digital currencies that can be managed online by exchanges. This could be set at between 10-20% of customer deposits, the Japan Times report suggested.
Exchanges store most of the crypto assets belonging to their customers offline in so-called “cold” wallets, as opposed to the more vulnerable “hot” wallets that store assets online for instant access.