Japan's Regulators Crack Down on Crypto Exchanges

Japan’s financial regulator is on the regulatory offensive with several bitcoin exchanges, according to several unnamed sources cited by Reuters.

The Financial Services Agency (FSA) plans to dish out administrative punishment notices by the end of the week and will likely force some to suspend their operations.

Among its reported moves, the FSA is expected to demand that Coincheck Inc. improve its security standards after it had been targeted by hackers who stole about $350 million in cryptocurrency. In response that heist, the agency has required exchanges to file reports on storage and security management. (See also: Coincheck May Have Suffered The Worst Hack In Crypto History.)

The FSA will dole out the penalties after it conducts on-site inspections and if it detects flaws in anti-laundering measures or in protecting consumers. The Reuters report did not specify which exchanges would be targeted for the checks nor what exactly the punishments would entail. Neither Coincheck nor the FSA provided comment.

Last year, Japan became the first country in the world to regulate exchanges for digital currencies like bitcoin. Regulators have approved 16 exchanges for operation. An additional 16 exchanges, including Coincheck, were granted permission to operate as FSA processed their applications.

The FSA is also monitoring how Coincheck, which has promised to repay hacking victims a total of $425 million, is progressing with its compensation plans.  

Bitcoin’s value has gain some traction in recent weeks, but slid 1.35 percent against the dollar by midday Wednesday. Bitcoin was trading at about $10,647 per U.S. dollar, down by nearly 50% from its high near $20,000 in December. (See also: Bitcoin Price Tumbles as Cryptocurrency Bloodbath Continues.)

So far this year, bitcoin is down about 25.5 percent, although in the past month the volatile asset has gained 31.6 percent. Bitcoin recently drew the lowest number of official transactions per day as it had in the past two years, according to a report by Coin Telegraph. (See also: Bitcoin Trading Volume Plunges to Two-Year Low.)

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