Japan to inspect 15 applying virtual currency exchanges

February 16, 2018

Tokyo- Japanese Financial Services Minister Taro Aso on Friday announced plans to conduct on-site inspections of 15 virtual currency exchange operators in the nation that have filed for registration with regulatory authorities.

The inspections, which will follow the theft of about 58 billion yen worth of virtual currency NEM from Tokyo-based cryptocurrency exchange operator Coincheck Inc. in late January, will focus on the 15 operators' safety measures for their computer systems and how they manage customer assets.

Five of them have already been informed of the planned inspections.

Announcing the on-site inspection plans at a press conference, Aso warned customers of the 15 operators to keep in mind that financial regulators are currently examining their applications for registrations.

Following the high-profile theft, the Financial Services Agency ordered 16 registered virtual currency exchange operators and the 15 unregistered operators to check and report their safety steps, including measures against unauthorized access.

After an analysis of their reports, the FSA concluded that detailed inspections are necessary for the 15 operators.

The agency carried out an on-site inspection of Coincheck on Feb. 2.

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

Virtual currency exchange operators that launched services before the effectuation of the revised law and are yet to be registered are allowed, as a provisional measure, to do business when regulators are examining their registration applications.

The cryptocurrency theft from Coincheck occurred while its registration application was under review. Jiji Press