Japan Trust Banks to Protect BTC Investors in a New Way

Japanese trust banks are going to protect crypto investors' assets from hackers and exchange bankruptcies
12 February 2018   163

Japanese trust banks plan to offer new ways to protect crypto-currency investors by managing the digital assets of exchanges. This is reported by the Nikkei Asian Review.

Such services, as financial institutions consider, will ensure the safety of clients' funds even in the event of bankruptcy of exchanges.

Traditionally, Japanese trust banks are engaged in lending and receiving savings, as well as carry out trust operations, usually with property or pension funds.

Now they can expand the range of services offered, covering the cryptocurrency industry. According to the plan, users of crypto exchanges will continue to trade transactions on them, but banks will manage the funds. The exchanges themselves will become just intermediaries between traders and financial institutions.

The first who is expected to implement such an initiative in April, will be Mitsubishi UFJ Trust and Banking. In addition, Sumitomo Mitsui Trust Bank also plans to provide similar services.

The new law on payment services, which took effect in April last year, requires that exchanges manage user funds separately from their own. However, many Japanese crypto-exchanges are small start-ups with limited investment opportunities, and often they consider users' means as their own. And the latest incident with Coincheck, the second-largest crypto exchange in Japan, has shown that large platforms are also at risk, whose capabilities in terms of providing protection are much broader.

Guarantees for the return of funds to investors in the event of fraud, burglary or bankruptcy, as a rule, are not provided, and this is exactly what Mitsubishi UFJ Trust and Banking wants to solve. The current legislation requires that trust banks manage assets separately, and in the case of crypto-exchanges it is assumed that users' funds will be stored in "cold" wallet without connection to the network. In addition, the bank will create numerous keys to online purses - this will help prevent unauthorized access and withdrawal of large amounts.

It is assumed that cooperation with trust banks will help exchanges make transactions more secure, but there are also fears that they can become more lengthy. Nevertheless, as the incident with Coincheck showed, the issues of security and safety of customer funds are increasingly coming to the fore.

SEC Suspends Trading in 3 Companies

On Friday The U.S. Securities and Exchange Commission temporarily suspended the trading of three companies as they made the purchase of cryptocurrency and blockchain-related assets
17 February 2018   126

According to the announcement, the trade of  Cherubim Investments, Inc., PDX Partners, Inc., and Victura Construction Group, Inc. will be suspended between 9:30 a.m. EST Friday and March 2. The notice was dated Feb. 15.

SEC stated that its trading suspension orders state that recent press releases issued by CHIT, PDXP, and VICT claimed that the companies acquired AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology, among other things.

The release also indicates additional reasons for the suspensions. The agency’s orders also say there are questions regarding the nature of the company's business operations. In case of CHIT, the Commission suspended trading in the securities because of its delinquency in filing annual and quarterly reports.

In August 2017, the SEC  issued a warning for investors about the companies that may publicly announce ICO or coin-related events to affect the price of the company’s common stock.

Fraudsters often try to use the lure of new and emerging technologies to convince potential victims to invest their money in scams. 

U.S. Securities and Exchange Commission