Upon completion of its first phase of inspecting cryptocurrency exchanges, Japan’s financial regulator is reportedly set to issue business suspension orders for unregistered exchanges.
According to the Nikkei, Japan’s Financial Services Agency (FSA) is due to announce punitive measures that include business suspension orders for some cryptocurrency exchange operators. The country’s financial regulator has increased its scrutiny of exchanges and trading platforms following the $530 million hack of Tokyo-based exchange Coincheck in late January. One of 32 exchanges operating in the country, Coincheck is notably not among the 16 operators registered with the regulator, under new legislation.
As reported at the time, the financial regulator confirmed it would conduct on-site inspections of all domestic exchanges to check their internal auditing practices, anti-money laundering measures and cybersecurity infrastructure to ensure robust security measures to safeguard customers’ assets.
The regulator has now completed its first phase of inspections, the Nikkei report confirms, with the FSA set to issue ‘business suspension’ orders for an ‘unspecified’ number of exchanges.
The report further suggests that the suspension orders will be issued to exchanges that have been operational while despite their FSA applications currently being reviewed. The sixteen exchanges already registered are ‘unlikely’ to be targeted while those who are to be scrutinized will be mandated to ‘improve all aspects of their operations.’
The punitive measures are set to be announced by the end of the week alongside a second business improvement order to Coincheck, which is yet to compensate its users for the NEM theft. The exchange has already lifted a temporary freeze on withdrawals of fiat deposits, leading to customers rushing to take out 40.1 billion JPY ($372 million) in a single day on February 13.