Japanese financial regulator has come up with a new set of screening requirements for crypto exchanges which seek approval to operate in Japan. The financial agency which was previously focusing on the registrants’ system safety measures and financial health will now look into the background of the exchanges and it’s promoters.
New Crypto Exchange Requirements
Japanese top financial regulator, the Financial Services Agency (FSA), has
“tightened its registration screening for cryptocurrency exchanges to see whether they are properly conducting risk management,”
the Japan Times reported, quoting sources.
Specifically, the sources revealed on Saturday that the agency has
“increased the number of questions asked when screening applications to about 400 items, up fourfold,” the news outlet conveyed. “Previously, the questions only covered such items as an applicant’s financial status and measures to ensure system safety.”
The sources also revealed that,
“It [FSA] now obligates applicants to 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 agency plans to
“assess whether company executives are properly involved in decision-making by perusing the records of board meetings,” the sources clarified. “The upgraded screening process also regularly reviews the composition of an applicant company’s shareholders, while examining if an internal system is in place to check for links to antisocial groups.”
On-Site Inspections of Exchanges
Since the Coincheck hack which happened in January, the Financial Services Agency (FSA) has conducted on-site inspections of nearly 20 cryptocurrency exchanges operating in Japan. FSA then released a press report which stated that the exchanges lacked internal control to the extent where there is a lack of board meeting minutes!
Soon after the inspections, FSA issued business improvement orders to 6 fully-licensed crypto exchanges. Also, 13 quasi-operators (exchanges which are allowed to operate while FSA reviews their license applications) have withdrawn their applications. Now the only 3 quasi-operators left in the market are Coincheck, Everybody’s Bitcoin and Lastroots.
This week e-com company Rakuten has announced it’s planning on acquiring Everybody’s Bitcoin. FSA has also mentioned that around 160 new Crypto Exchange Operators have expressed their interest in entering Japan’s crypto space.