Regulators in Japan with the Financial Services Agency (FSA) have ordered two separate cryptocurrency exchanges into 30-day suspensions. The organization will examine the companies’ operations and transaction histories before making official decisions regarding their returns.
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Japan Means Business
Bitsonline reported on March 7th that Japan would be punishing all cryptocurrency exchanges that didn’t take customers’ finances or privacy seriously, and lawmakers weren’t kidding. Only 24 hours later, FSHO in Yokohama City and Bit Station in the Nagoya Prefecture were slapped with notices that they were being forced into month-long suspensions starting on March 8th.
For the most part, Japan has been friendly to bitcoin and its altcoin cousins. Many businesses in the region accept bitcoin as payment for goods and services, but following the Coincheck hack this January, Japan has sworn to ensure major improvements in the way it conducts cryptocurrency-related business. Prior to Coincheck was the Mt. Gox debacle in 2014, and officials seem tired of all the humiliation.
Reasons Behind the Suspensions
Per FSA officials, FSHO’s shutdown occurred due to the company’s failure to implement an “effective and appropriate system to monitor trading.” Additionally, regulators are saying the company has not trained its employees correctly.
Regarding Bit Station, it has been alleged that a senior employee ultimately diverted customers’ cryptocurrency deposits into his own account. The agency is thus calling Bit Station’s cybersecurity into question, and a shutdown is necessary to conduct further study.
In addition to the fates of FSHO and Bit Station, the FSA says it has enforced “administrative penalties” on several other Japanese exchanges including GMO Coin, Tech Bureau, Mister Exchange, Increments and, of course, Coincheck, which will begin reimbursing clients affected by the malware attack as early as next week. Customers will be paid in yen, the national currency of Japan, based on the price of NEM at the time of the hack.
A Step in the Right Direction
Bitcoin expert and representative director of WIZ K.K. in Tokyo J. Maurice feels the FSA is making the right move. He says the message has been sent that Japan will not turn its back on criminal activity, and he believes the crypto-trading community will set itself straight:
“We are considering applying for a cryptocurrency exchange license this year, so we are following this news with great interest. There was a time when Mark Karpeles, the CEO of Mt. Gox, approached the FSA for advice, and they told him to do as he wished, as bitcoins were unregulated. Now, they are taking steps to make sure users are protected […] The public doesn’t buy or sell depending on their confidence in the FSA, but they might choose which exchange to use depending on what the FSA says or does.”
Do you agree with the shutdowns and current penalty system? Post your comments below.
Images via Pixabay, The Japan Times