Japan’s Financial Services Agency (FSA) will begin more closely monitoring cryptocurrency exchanges from next month.
According to the Japan Times, the increased scrutiny is aimed to ensure that the companies comply to the revised payment services law, passed in April this year, which set out operational standards for exchanges, as well as recognizing bitcoin as a form of legal tender.
An FSA executive reportedly indicated the surveillance is intended both to regulate the exchanges and to ensure the healthy growth of the cryptocurrency market, saying:
“We pursue both market fostering and regulation enforcement. … We aim for sound market development.”
The payment services law passed earlier this year established anti-money laundering and know-your-customer rules for the exchanges. The law is also intended to enforce security standards aimed to protect the exchanges from the risk of cyberattack.
The law specifies that all exchanges must report to the authorities by the end of September to confirm they are compliant with the new rules. The FSA also has the remit to conduct on-site inspections if deemed necessary.
To monitor the over 20 cryptocurrency exchanges operating in Japan, the FSA last month established a specialised surveillance team, reportedly comprised of 30 staff members.
Japan is no stranger to cryptocurrency based fraud, with 33 cases, representing more than a half of million dollars-worth of loses, reported in the first seven months of 2017.
Further, in 2014, the now-notorious Japan-based bitcoin exchange Mt Gox collapsed, resulting in the loss of millions of dollars in customers’ funds. Japanese lawmakers have previously cited the exchange’s failure as a key driver in the move to regulate the cryptocurrency industry.
Japan surveillance image via Shutterstock