Japan’s Financial Services Agency – the country’s chief regulator overseeing the cryptocurrency market – will be sending business improvement notices to five of the region’s registered cryptocurrency exchanges, according to a new report.
The notices are being issued after the FSA conducted inspections at crypto exchanges BitFlyer, Bitbank, BtcBox, BITPoint Japan, and Quoine. The inspections found that the five exchanges do not have the proper internal infrastructure to monitor for and prevent money laundering.
The Japanese Financial Services Agency has been tightening its grip on the crypto market after Coincheck was hacked for over $500 million in NEM tokens. Under increased scrutiny, many exchanges in Japan have elected to close their doors rather than comply with the FSA’s requests for greater cyber security measures, KYC and AML standards.
While the stricter guidelines have caused trouble for some exchanges, it has not deterred other exchanges from setting up shop in Japan – Japan is one of two countries to officially recognize bitcoin as a legal currency. SBI Holdings launched the country’s first bank-owned cryptocurrency exchange earlier this month, and the popular San Francisco-based crypto exchange Coinbase is planning to launch an exchange in Japan.
In related news, Japan’s self-regulatory entity, the Virtual Currency Exchange Association, is said to be releasing a new set of voluntary rules for cryptocurrency exchanges to adhere to. One such anti-money laundering voluntary regulation proposed will exclude privacy-focused cryptocurrencies like Monero from being traded in Japan.