The Japan Virtual Currency Exchange Association (JVCEA), the self-regulatory body has decided to tighten its customer asset management measures for crypto exchanges. The self-regulatory body has decided to tighten the rules in the wake of the recent hacking incident of the Zaif crypto exchange.
According to sources, the JVCEA will be setting a ceiling on the amount of digital currencies that are managed online. This ceiling will be tentatively around 10 to 20 percent of the deposits made by customers. The JVCEA will be revising the self-imposed rules and implement them once it receives a go-ahead from the Financial Services Agency (FSA) in accordance with the payment services law.
In the recent crypto exchange Zaif hack, around ¥7 billion worth of cryptocurrencies were stolen from the exchange that was run by Tech Bureau Corp. The funds that were stolen from the Zaif exchange were managed online. Out of the total stolen funds, around ¥4.5 billion belonged to Zaif’s customers.
Usually, crypto exchanges keep large portions of the customers’ virtual currencies on cold storage wallets for security reasons. However, they still store a certain amount of cryptocurrency online on a hot wallet that’s connected to the internet. This makes it vulnerable to potential hacking attacks, as stated in the Japan times.
JVCEA which was established in April 2018 is a self-regulatory group of some of the largest licensed crypto exchange operators in Japan. The regulatory body has decided to tighten its rules by setting a limit on the amount of virtual currencies that can be managed online by any exchange.
Prior to the crypto exchange Zaif hack, an even larger case of hacking was reported this year. Hackers attacked crypto exchange Coincheck and managed to whisk away with $523 million worth of NEM coins. The stolen crypto assets were apparently stored on hot wallets. Shortly after the Zaif exchange hack, the FSA has launched an investigation to verify whether the company will be able to cover the losses of customers, as stated in the Cointelegraph report.[The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and/or the official policy of the website. ]