According to reports from a Japanese media, Financial Services Agency of Japan [JFSA] has successfully strengthened the registration screening for cryptocurrency exchanges. This implementation of the revised registration screening is to check if the exchanges are properly carrying out risk management.
The country is known for being one of the early adopters of cryptocurrency and the news of strict regulation on cryptocurrency exchanges has been doing rounds in the market since the beginning of this year. This was due to the hack of Coincheck, one of the leading cryptocurrency exchange platform of Japan.
Coincheck is recorded to be the second biggest cryptocurrency exchange hack after Mt. Gox, which was also based out in Shibuya, Tokyo. The exchange platform lost almost $530 million of NEM tokens to the hackers. This was followed by Japan’s Financial Services Agency stepping in by strengthening the cryptocurrency exchange regulations with the focus set on preventing another heist.
Japan’s FSA had announced that they would implement an improvised strict framework for the regulation of cryptocurrency exchanges. This would begin this summer and the rules will apply even on the existing exchange platforms which have received an approval from the government.
According to the recent reports, the registration process of the cryptocurrency exchange platform will be carried out under the revised Payment Services Act. This act was put in force in the month of April 2017, with the priority of protecting the cryptocurrency users.
The revised registration screening process includes an increase in the number questions, close to 400, which are asked during the screening process. In addition, before sending the questions to the exchange platform, the FSA would conduct an on-site inspection in order to validate the answers that are submitted.
The exchange platforms will be required to submit the minutes of meeting conducted by the Board of Directors. This is added to check whether there are enough meeting conducted, which concerns the financial stability and the security of the computer systems of the exchange platform.
Moreover, the Financial Services Agency will be using the records of the board of meetings to check whether the executives of the exchange platform are involved in the decision-making of the company. This also includes a regular inspection of the composition of the company’s shareholders and examining whether the internal system is in place to check for the links to antisocial groups.
The previous screening process for exchange platform consisted of checking the financial status of the applicant and the measures taken by the exchange platform to ensure the safety of its systems.
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