FSA to inspect applying cryptocurrency exchanges

February 15, 2018

Tokyo- Japan's Financial Services Agency will conduct intensive on-site inspections of 15 cryptocurrency exchanges that are operating in the country while waiting for their registration with regulatory authorities, Jiji Press learned Wednesday.

The FSA is set to target those companies in the wake of the recent theft of 58 billion yen worth of digital money at major exchange Coincheck Inc., which is in the same situation, informed sources said.

Through the intensive inspections, the FSA will scrutinize the management systems of the 15 exchanges and decide whether to approve their registration as virtual currency exchanges, the sources said.

On Wednesday, the FSA notified some of the 15 companies that the agency will carry out on-site inspections, the sources said.

Japan introduced the registration system for cryptocurrency exchanges under the revised payment services law, which took effect in April 2017.

The 16 unregistered exchanges, including Coincheck, are allowed to do business under a provisional measure for those that had launched virtual currency exchange services before the revised law came into force.

The FSA plans to decide whether to register them by June. Those failing to be registered will become unable to continue their operations in Japan.

At Coincheck, regulators have found poor security measures against cyberattacks and sloppy systems to protect customer assets.

Following the theft of cryptocurrency NEM at Coincheck on Jan. 26, the FSA issued a business improvement order on Jan. 29 and started an inspection of the exchange on Feb. 2. Jiji Press