Gov’t Review Suspends 2 Exchanges, Rebukes Others after Breaches
Japan’s financial regulatory body, the Financial Services Agency, has suspended trading at Japanese cryptocurrency markets Bit Station and FSHO on March 8, according to the Wall Street Journal.
Despite Japan’s status as “one of the loosest regulatory landscapes for crypto exchanges and investors” with a relatively hands-off approach to crypto regulation in the past, this week’s round of punitive and precautionary actions suggest that Japanese regulators are growing increasingly weary of the costly hacks, breaches, and heists plaguing online crypto exchanges. It’s become a risky landscape of booming new markets which enjoy little or no regulatory oversight compared to traditional security exchanges.
The shutdown of the two exchanges was implemented as a consequence of Japanese exchanges’ insufficient data security and customer protection, with worries that the companies lacked sufficient measures to prevent heavy monetary losses or data breaches from hacks, phishing, theft, and other cyber risks. This year has already seen several crypto crashes in Japan and abroad, including the $530 million hack of Japanese exchange Coincheck in January, which spurned the Financial Service Agency’s legal measures this month.
In addition to the month-long moratorium on Bit Station and FSHO trading, the Financial Services Agency also demanded that Coincheck and six other Japanese crypto exchanges provide plans to safeguard customer assets by March 22 to assure regulators that the markets can operate with sufficient control and security measures to prevent future hacks and crashes.