Why bitFlyer is Suspending New Account Registrations
Japanese cryptocurrency exchange bitFlyer has suspended new account registrations as it seeks to align its systems with strict anti-money laundering and Know-Your-Customer policies as required by the regulator. This comes only days after the authorities urged exchanges to strengthen their infrastructure.
Cryptocurrency exchanges in Japan are smarting after a spate of high profile hackings in the past, the latest against CoinRail happening only last week. In the wake this, authorities have taken a tough stance, requiring cryptocurrency business to better safeguard customer funds.
Regulator physical checks are part and parcel of the Financial Services Authority’s measures to ensure compliance in the sector.
Most recently, the regulator has been cracking down against anonymous currencies such as Zcash, Monero and Dash for their ease with which they can enable vices such as money laundering and terror financing.
While Japan has some of the most advanced cryptocurrency regulations anywhere in the world, its efforts are crippled by the lack of regulations elsewhere.
Lately, the country has been lobbying for greater regulations in the sector under the aegis of the G20 group of countries and other platforms.
Last week, the regulators asked the Financial Action Task Force to implement cryptocurrency regulations internationally.
“It’s nearly impossible for Japan to handle the problem alone. Even if trade is restricted to only domestic transfers or monitoring is enhanced, it’s still not enough to counter money laundering. It would be best if all the group of 20 industrial and emerging nations and regions (G20) would take the same steps toward prevention,” a spokesperson for the Financial Services is quoted as saying.
Japan is one of the most vibrant centres worldwide for cryptocurrency trading. Efforts to curb the growth of the sector have been met with resistance in the past.
The FSA has in the past issued improvement orders requiring exchanges to implement stricter security controls and KYC policies.
In March, the body suspended several exchanges for one month over lapses. Some eventually chose to voluntarily close down.
Binance, the largest cryptocurrency exchange was forced to shut after being found to be operating without a license.
On Tuesday, reports surfaced the agency has asked five exchanges overhaul their AML, transaction monitoring and internal management systems over what it termed as severe flaws.
The suspension of new account registrations by bitFlyer is in response to the directive. Existing accounts will also be verified. Other exchanges that were given improvement orders include Bitbank, BITPoint Japan, and BtcBox.
bitFlyer apologised to its customers for the inconvenience. It is now required to submit its plans by July 23 and update the FSA on a monthly basis.
It comes amid revelations that criminal groups have been laundering money through some of the biggest exchanges in the country.
Exchanges are also keen to avert deeper crackdowns after repeated cyber attacks. The ongoing regulatory scrutiny was occasioned largely by an attack in January against Coincheck in which an estimated $530 million worth of NEM tokens were stolen.
750,000 bitcoins were lost in 2014 after hackers attacked Mt Gox then the biggest exchange globally controlling 70% of all transactions.
Bithumb, one of the largest exchanges was also attacked last week. About $30 million is said to have been lost in the attack.