FSA Lays Out Five-Point Agenda To Prevent Repeat Of Coincheck Hack Incidence

FSA Lays Out Five-Point Agenda To Prevent Repeat Of Coincheck Hack Incidence

cryptocurrency exchange News Regulation
May 7, 2018 by Sandra Onyeiwu
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Japan’s Financial Services Agency (FSA) is aiming to avoid a repeat of the Coincheck cryptocurrency exchange hack incidence that happened in January, has set out new regulatory standards for cryptocurrency exchanges platforms in the country. The country’s Financial Services Agency expects to begin using a new, stricter framework for registered cryptocurrency exchanges this summer, and will
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Japan’s Financial Services Agency (FSA) is aiming to avoid a repeat of the Coincheck cryptocurrency exchange hack incidence that happened in January, has set out new regulatory standards for cryptocurrency exchanges platforms in the country.

The country’s Financial Services Agency expects to begin using a new, stricter framework for registered cryptocurrency exchanges this summer, and will advise those that fail to meet its new rules to discontinue operations. Both new and existing operators will be required to meet the new standards.

The new measures by the FSA while being strict are not meant to alter that narrative. Instead, the Agency wishes to sanitize the market, protecting investors, and preventing money laundering.
To this effect, the FSA has released a new five-point agenda for regulating the crypto exchange arena.

  1. Crypto exchanges will be subject to tougher standards on system management. They will not store currency in internet-connected computers and will have to set multiple passwords for currency transfers.
  2.  Exchanges will have to put more effort in preventing money laundering by verifying customer identification for major transfers.
  3. crypto exchanges platforms to manage customer’s assets separately from the corporate exchange assets. And regular daily checks on customer account balances to prevent any manipulation. And also prevent their employees from making unauthorized trades with client’s funds.
  4. The FSA has blacklisted privacy-focused cryptos which grant complete anonymity making them popular with money laundering activities. There will also be new rules regarding the types of cryptocurrencies used at registered exchanges.
  5. Lastly, the FSA will require stricter internal regulations. Operators will need to separate shareholders from management. System development roles will also be separated from asset management roles to keep employees from manipulating the system for their own gain.

The new five-point framework will let the agency perform a detailed assessment and identify potential risks in advance.
The FSA will first review documents submitted by operators seeking government registration. It will then send inspectors to those that pass the initial screening to review their system operations and verify the number of employees.

 

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