FSA to Punish Major Crypto Exchange Operators

June 20, 2018

Tokyo- The Financial Services Agency is seen issuing business improvement orders this week to at least five of the 16 cryptocurrency exchange operators registered in Japan, including industry leader bitFlyer Inc., it was learned Tuesday.

The upcoming punitive action suggests even operators registered under the revised payment services law, enforced in April last year, have not yet established adequate internal control systems.

Through the move, the third against multiple cryptocurrency exchange operators, the agency aims to make the industry healthier.

Digital currency transactions in Japan in fiscal 2017 made a 20-fold jump from the previous year to some 69 trillion yen, while some exchange operators failed to take sufficient measures against money laundering, such as verifying customers' identity, or suffered glitches caused by excessive loads on their systems.

The agency in February carried out on-the-spot inspections of all operators under screening for registration and took administrative action on many of them, following the massive theft of customer assets held in the NEM cryptocurrency from Tokyo-based Coincheck Inc., which was also under screening, in January.

In addition, the agency has scrutinized about half of the registered operators since February. Business improvement orders have been issued to Tech Bureau Corp., based in Osaka, western Japan, and Tokyo-based GMO Coin Inc. Jiji Press