Japan’s financial watchdog prepares penalties for local crypto exchanges

Written by: Michael Harris
October 10, 2019

Japan’s financial watchdog is preparing a crackdown on cryptocurrency exchange operators, local business news publication Nikkei Asian Review has reported.

According to a report published today, the country’s Financial Services Agency will issue administrative punishment notices to several crypto exchanges based in the country, with some of them expected to receive business suspension orders. The punitive action was expected to be announced by the end of the week, Nikkei said.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

The move comes as a result of a regulatory investigation into cryptocurrency exchanges operating in the country that was launched in the wake of a January hack, in which more than $500 million worth of NEM tokens were stolen from the Coincheck exchange. The FSA said after the heist that it would investigate both registered and unregistered crypto exchange for security flaws that could enable money laundering or endanger customers’ funds.

According to Nikkei, the business suspension orders will be issued to some of the unregistered exchanges, which will also be instructed to improve all aspects of their operations. Exchanges that were already registered during the checks are unlikely to be affected, the publication says.

A separate report by Reuters suggests that regulator may also order two of the registered exchanges, GMO Coin and Zaif, to improve their businesses. Both Reuters and Nikkei report that Coincheck is likely to receive a notice, its second since the heist, to raise its standards.

The cryptocurrency market has plummeted following the reports, with most major cryptocurrencies experiencing heavy losses. Bitcoin dropped below $10,000 for the first time in nine days and its price is now hovering around $9,800. At the same time, the Ethereum price hit a near one-month low of $731.89.