Onsite (FSA) inspections of 16 licensed Japan Cryptoexchanges and 7 with licenses pending has revealed generally loose business practices and controls, according to a Japanese Financial Services Agency.
The examinations were showed by the FSA in cooperation with Japan’s Consumer Protection Agency and the National Police Agency. Japan was the locus of two of the most infamous cryptocurrency exchange hacks in history. The first was the $500 million Mt Gox exchange hack that took place in 2014 and the second was the $700 million Coincheck hack that happened in January.
Crypto trading has become a huge business in the market of Japan. In January 2018, 57 percent of bitcoin trades took place the Japanese yen. Japan’s FSA had a team that aimed to observe Japan Cryptoexchanges in place from August 2017. It also found that exchange operations had failed to scale suitably in response to 2017 boom in user demand.
Furthermore, FSA has found that the total assets of the exchanges quickly extended to more than 8 times in one year. The FSA is also worried that there are less than 15 executives and employees at many places, with assets under custody of 5 billion yen [~US$30 million] per individual on average.
As per the news published in Crowdfund Insider, at present, there are more than 100 companies waiting to be registered. The exchange can be a good way to find bitcoin sellers if no other selections exist. In Japan, they have companies like megabanks, major IT companies, and major securities companies where it is easiest and fastest way to buy bitcoins with altcoins. While few of them by now submitted applications to the FSA, other have only gone through one discussion with the agency.
The FSA will make full use of the results from the inspections when studying new candidates. Since after the hack of Japan Cryptoexchanges the agency has not approved any further crypto exchanges.
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