Japan: Regulator Steps up Crypto Exchange Policing
Japan’s regulatory Financial Services Agency (FSA) is set to intensify its policing of licensed exchanges – and will toughen its criteria for companies seeking to gain cryptocurrency exchange operating permits.
The agency has recently concluded a series of inspections on existing exchanges, and has expressed concern that too little is being done to bolster security and fight money laundering.
Japanese news outlet IT Media reports that an FSA official said, “Many major platforms have seen a rapid rise in trading since fall last year. But while transactions are rising rapidly, companies are not keeping pace with advances in their internal control systems.”
The FSA claims that, in some cases, just two employees are being charged with managing up to USD 30 million worth of cryptocurrency funds. The agency also states that 75% of exchanges keep a staff of 20 people or less – a number the FSA feels is hopelessly inadequate to deal with potentially huge sums of money and tokens.
The agency has also stated that it will ask licensed exchanges to conduct and submit risk assessment checks on a regular basis, and plans to conduct more inspections in the near future.
FSA officials believe that despite several warnings, a number of exchanges are still being lax in their approach to money laundering – and would like exchanges to be more proactive in their efforts to fight crime and fraud. The agency last week suggested that it would seek to make changes to the Japanese law to allow it to regulate exchanges more thoroughly in the future.
In addition, new exchanges applying for operating licenses will be required to submit exhaustive documentation pertaining to their business plans and internal control systems, and will have to conduct in-person hearings with FSA officials. The FSA will also conduct on-site inspections at all newly licensed exchanges to ensure companies are staying true to their pledges.
