The Japanese Financial Service Agency (FSA) is currently looking to force some licensed cryptocurrency exchanges to improve their services, with the agency aiming to tackle issues such as internal systems, including anti-money laundering (AML) measures.
This latest development was reported by Nikkei earlier today, with the report adding that the FSA aims to ensure that the licensed exchanges fully comply with the set AML rules as the customer funds in their continues to increase.
The report added that bitFlyer and Quoine are some of the cryptocurrency exchanges that will receive the business improvement orders from the agency this week. The FSA during its recent investigation found that some of the licensed exchanges have yet to put up enough measures that would help them spot suspicious transactions. The agency is also concerned that with exchanges aren’t hiring enough staff to deal with the growing transaction volumes on their platforms.
The FSA cautioned bitFlyer back in April after it realized that the ID verification process on the exchange is loosely enforced, with the exchange promising to strengthen the verification process afterward.
The agency which has been very active ever since the Coincheck hack at the start of the year also issued business improvement orders in March to some registered exchanges including GMO Coin and Tech Bureau, with the exchanges not very popular amongst traders.
Earlier this month, the FSA which has placed a ban on private cryptocurrencies like Monero issued its first-ever license rejection to cryptocurrency exchange FSHO. The dismissal came after the agency served the firm with two suspensions due to claims that it has refused to implement security and AML improvements correctly.
The agency in its statement then stated that “The FSA aims to demonstrate its attitude toward building a healthy trading environment in Japan by barring an unworthy exchange operator.”
This latest development comes just days after the country’s self-regulatory group of cryptocurrency exchanges proposed to strengthen their AML measures by stopping the listed platforms from supporting anonymous cryptocurrencies like Monero.
The self-regulatory group which revealed that it would officially announce the guidelines on June 27th stated that the rules would include a ban on insider trading, penalizing cryptocurrency exchange employees if they engage in “inappropriate” trading due to their firsthand knowledge.
The group which was formed after the hack of the Coincheck exchange that saw the hackers cart away with $530 million worth NEM coins, it combined the two crypto entities already in existence — the Japan Blockchain Association (JBA) and the Japan Cryptocurrency Business Association (JCBA), with favorite cryptocurrency exchanges like bitFlyer, Bitbank and Quoine part of the group.
At the moment, a total of sixteen cryptocurrency exchanges have so far received licenses from the agency, with the exchanges now operating entirely in the country. The licenses became a necessity for exchanges following last year’s legislation wherein Japan’s updated Payment Services Act recognized bitcoin as a legal method of payment.