Report: Japanese Officials Draft Regulation for Bitcoin Exchanges

Japan’s financial regulators are reportedly moving closer to creating a system for registering and overseeing domestic digital currency exchanges.

Citing “informed sources”, The Japan Times reports a working group beneath the Financial Services Agency’s Financial System Council is finalizing a draft text that, once finished, will be submitted to the country’s legislature, the Diet, next year.

According to the Times, the draft text calls for a range of capital and auditing requirements for those running domestic exchanges, in addition to know-your-customer (KYC) anti-money laundering (AML) mandates.

Another meeting is said to be taking place on Thursday of this week to discuss the proposal.

The Times explained:

“The draft proposes setting financial conditions that virtual currency exchange operators should meet, such as a certain amount of capital, and requiring them to manage customer assets separately from their own corporate assets. In addition, it calls for introducing a mandatory system for exchange operators to undergo external checks by certified public accountants or auditing firms for their asset management conditions and financial statements.”

News that a draft text has been prepared comes weeks after word emerged that a working group had been convened to consider how exchange activities were regulated.

Japanese officials have called for more stringent measures in the wake of the 2014 collapse of Tokyo-based bitcoin exchange Mt Gox and, later, the arrest of its CEO, Mark Karpeles.

Karpeles is currently being investigated for embezzlement and fraud connected to the loss of hundreds of millions of dollars in customer bitcoins.

The FSA did not immediately respond to a request for comment.

Japan image via Shutterstock