The Financial Services Agency (FSA) of Japan is preparing to issue a new set of rules for cryptocurrency exchanges in the country. This decision is motivated by the recent Coinbase exchange hack, which resulted in the loss of more than $500 million worth of crypto.
Japan has traditionally been viewed as a crypto-progressive country, and the FSA aims to protect that image by all means. According to the agency, the new measures will serve to increase the security of investors and are designed to target money-laundering operations. The new plan released by FSA contains five points.
The first point is the introduction of mandatory security standards, such as the necessity of two-factor authentication for any attempted transaction. Additionally, the digitals assets are not to be kept in online wallets, which can be easily hacked.
The second point is devoted to the clarification of know-your-customer (KYC) processes. The goal of this is to curb money laundering. The bigger the crypto transfer is, the more information is required to submit to the authorities.
The third proposal of the FSA is to force exchange platforms to manage customer assets separately from the corporate exchange assets. In order to ensure this policy, FSA will conduct regular checks of the customer’s accounts.
As the fourth point of its plan, the FSA plans to outlaw all anonymous privacy-focused cryptos citing suspicions of money laundering as the reason behind the move.
The fifth point specifies the structural organization of an exchange. According to the FSA requirements, there should be a strict separation between the management team and the shareholders, which prevents insider trading and protects against internal manipulation.
The proposed regulation will be enforced once the FSA begins accepting applications for registration.