The for Financial Services Agency of Japan (FSA) plans to tighten the requirements for local exchanges. According to Nikkei, this is done in order to reduce the risks of large-scale hacker attacks.
In January, the Coincheck exchange was hacked, as a result of which it lost more than $ 500 million in the cryptocurrency. After this incident, the FSA began active operations in the Japanese market.
At the same time, Japan adheres to an open approach to crypto-currencies and does not plan to impose a complete ban on trade, instead taking a number of steps aimed at protecting investors. To this end, the FSA has developed a program of actions to regulate the exchange of cryptocurrencies, consisting of five criteria.
First, the exchanges will be obliged to adhere to high security standards. These include the inadmissibility of storing assets on online wallet and two-factor authentication.
Secondly, the exchanges will have to strengthen measures to identify customers. This requirement is mainly aimed at combating money laundering.
Third, the FSA requires that exchanges follow the methodological guidelines for asset management. So, client assets should not overlap with the company's own assets. The balances on customers' accounts will be checked by exchanges on a daily basis, which should help them to fight the manipulation. In addition, regulators want the exchanges to use mechanisms that will not allow their employees to carry out transactions with their clients' assets.
Fourthly, the regulator insists on the withdrawal of certain crypto-currencies from the bidding. In particular, its attention was attracted to anonymous crypto-currencies, which can also be used for money laundering. Regulated sites with such cryptocurrency will not be allowed to operate.
Finally, the fifth criteria refers to the organizational structure of exchanges. FSA encourages trading platforms to transparency and clarity. For example, the regulator wants the exchanges to clearly share their shareholders and managers, as well as employees involved in software development and asset management. This is done to prevent insider trading and other forms of internal manipulation.
Commenting on the new program, the FSA source said that in the future the agency intends to adhere to a more objective approach to the regulation of exchanges.
It is expected that the new requirements will come into effect as soon as the FSA starts accepting new applications for the registration of exchanges. They also apply to existing sites.