Japanese authorities are reportedly preparing to crack down on cryptocurrency exchanges by issuing “administrative punishment notices” to several and suspending others from doing business.
The move, which comes a few weeks after Japanese cryptocurrency exchange Coincheck was hacked, is a response to the country’s Financial Services Agency discovering issues with exchanges’ customer protection and anti-money laundering procedures, according to Nikkei.
Specifically, Nikkei reports that several exchanges had flawed processes, meaning they may allow money laundering or fail to ensure customers’ funds remain safe.
It is unclear what exactly the punishments will be or which exchanges will receive the notices, according to Reuters.
That being said, Coincheck at least will likely receive a notice to raise its system’s standards, Nikkei reported, which would be the second time it would be told to do so.
The FSA investigated exchanges to evaluate their risk management and cryptocurrency storage methods over the last few weeks, but the results of these investigations have not been released.
The regulator looked into both licensed and unlicensed exchanges, asking them to self-report their security protocols. Last month, it inspected 15 unlicensed exchanges, as previously reported.
The FSA’s efforts to more stringently regulate Japan’s cryptocurrency exchanges started after Coincheck admitted to losing roughly 500 million NEM tokens from its digital wallets.
Prior to the hack, Coincheck had been operating as an unlicensed exchange.
Japanese flag image via Shutterstock