Japan’s financial watchdog is introducing new registration rules for prospective cryptocurrency exchanges, according to local media.
Unnamed sources have told the publication that the Financial Services Agency is introducing new registration rules in order “to see whether they [crypto exchanges] are properly conducting risk management”. The changes include an increased “number of questions asked when screening applications to about 400 items, up fourfold”.
Along with the bolstering of the regulatory questionnaire, the Financial Services Agency will also reportedly require access to reviews of the composition of the companies’ shareholders in order to “check for links to antisocial groups”. Cryptocurrency exchanges will also be required to “submit minutes of board meetings so it can check whether enough discussions have been held about measures to sustain the company’s financial health and ensure the security of its computer system”.
The revised registration screening rules are reportedly a planned update to Japan’s Payment Services Act, which was enforced in April of last year. While aiming to protect the cryptocurrency community from financial risk, the regulatory changes may hamper the development of the country’s virtual assets industry, as the stricter rules may cause the over 100 aspiring cryptocurrency exchanges to pull back their applications or get filtered in the approval process.
Japan became the world’s first country to legalize cryptocurrency exchanges by introducing a licensing regime last year. After the massive amd infamous Coincheck hack totaling $530 million worth of NEM (XEM) tokens in January 2018, the government and the regulators widened their monitoring of the cryptocurrency market by making on-site inspections and giving business improvement orders to several exchanges.
Last month, the Financial Services Agency released the results of its probe of twenty three cryptocurrency trading platforms. The watchdog’s findings led it to the conclusion that it should be harsher when it comes to accepting new applications from crypto exchanges hoping to attain an operating license. The Financial Services Agency is also reportedly considering stricter rules on Bitcoin (BTC) and other virtual currencies to curb speculative investments.