Japanese financial regulator is still struggling with the effects of the Coincheck debacle and now wants higher security standards among all exchange operators.
Five stock exchanges are not officially approved in Japan. Although some time ago, the operators applied for an official authorization from the Financial Services Agency (FSA) . However, they were in the status of review until the very end. As the news portal Nikkei now reports, the stock exchange operators have voluntarily withdrawn their application.
The Financial Services Authority written to Tokyo GateWay and Mr. Exchange in early March in a letter to improve data security and introduce more security mechanisms. Previously, shortcomings had been identified. Now Tokyo GateWay and Mr. Exchange have to be closed. A number of stock exchanges had received the letter on March 8th. How it goes out in the other cases, it is still open. The other three exchanges Raimu, Bitexpress and Bit Station are comparatively small. They also see no chance of regulatory approval.
The stock exchange operators in Japan have been obliged to register with the FSA for one year now. To date, 16 stock exchanges are officially listed in the financial supervision. These include in particular the larger and well-known exchanges such as Bitflyer, Quoine and GMO Coin. Another approximately a dozen stock exchanges are in the application process for a license. They may continue to be active during the transitional period. Five soon-to-be-closed stock exchanges were all in the application process.
FSA requirements: off for smaller exchanges?
In January, hackers managed to steal Coins from Coincheck in the equivalent of 58 billion yen (about 480 million Euros). The FSA now personally visits the remaining candidates and checks their data security. In Japan, many people expect that not all remaining candidates will survive the safety check.
Japan Financial Services requires strict internal controls and comprehensive corporate governance policies. The rules are much less strict than for conventional exchanges. However, they clearly exceed the status quo of many candidates. Especially for smaller exchanges, it is not economical to meet these requirements. The necessary changes would be too costly. This news is bitter for many companies that planned a crypto exchange in Japan. Estimates speak of about 100 candidates. The strict conditions should make the majority of them now a line through the bill.
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