More Cryptocurrency Exchanges to Shut Down in Japan
Increased regulatory scrutiny continues to take a toll on cryptocurrency exchanges in Japan. Two more exchanges are voluntarily shutting down after being issued with orders to improve their security controls.
Mr. Exchange and Tokyo Gateway are withdrawing their applications to be recognised as cryptocurrency exchanges from the Financial Services Agency according to a report by Nikkei Asian Review.
The two were among at least six exchanges found to have wanting security measures. A major hack on Coincheck earlier this year in which $530 million worth of NEM tokens were lost saw authorities take a tough stance on exchanges.
Mr. Exchange and Tokyo Gateway will now close shop after returning customer deposits. A number of exchanges are also expected to follow suit.
The FSA penalized at least six exchanges last month for poor anti-money laundering and cyber security controls. Bit Station and FSHO were ordered suspended for one month to give them time to improve their systems.
Three other unregistered operators bitExpress, Bit Station and Raimu are also reportedly shutting down on their own volition having withdrawn their proposals to be registered by the financial regulator. This brings to five the number of casualties of the regulatory purge.
The regulator gave options to several exchanges with wanting controls a chance to voluntarily shut before the agency cracks the whip.
It has been carrying out on-site inspections in the 32 exchanges operating in the country.
Japanese laws recognize cryptocurrencies as a method of payment and exchanges are required to obtain a license to operate from the FSA.
Exceptions are however made for exchanges in operation before the law came into place in April 2017. Coincheck falls into this category.
At least sixteen exchanges are licensed to operate in Japan with several others under review. These are allowed to operate in the interim while they are reviewed but their systems should be at par with those of registered ones. The voluntary shutdowns suggest the bar might be set too high for them to meet.