Japan Financial Regulator Launches On-Site Inspections to Check Cryptocurrency Exchanges

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Japan Financial Regulator has decide to launch on-site inspections in order to curb the maniac of hacking. The regulator is going to inspect several cryptocurrency exchange operators potentially vulnerable to cyber-attacks and may widen its inspections, said a new report from the person who is directly linked to this matter, reported NDTV. This is a huge blow for the cryptocurrency and the people who invested in that.

According to the reports, The Financial Services Agency (FSA) last Friday did surprise inspection on Coincheck Inc of its systems after the Tokyo-based operator had $530 million in digital money stolen by hackers. The theft highlighted the vulnerabilities in trading an asset that policymakers are struggling to regulate. Japan last year became the first country to regulate exchanges at the national level.

Between Dec. 20 to Jan. 19, TV ads by Coincheck and bitFlyer were aired 819 times in the Kanto region, comparable to major firms such as Toyota Motor Corp., NTT Docomo Inc. and McDonald’s Japan. However, cryptocurrency ad campaigns have been the target of criticism after the Coincheck hack. Facebook also surprised the world last week with its announcement that it would ban all cryptocurrency-related ads.

Between 2014 and 2017, consumer claims regarding cryptocurrencies increased to 1,954 cases from 194, according to the National Consumer Affairs Center. The FSA said it would also investigate the other 31 cryptocurrency exchanges in Japan for security gaps. It ordered them to submit a report on their system risk management and storage of cryptocurrencies, and said it would follow up with on-site checks if it found vulnerabilities.

The Japan Cryptocurrency Business Association — a Tokyo-based exchange industry group of which Coincheck is a member — also requested its members last week to advertise responsibly. The group made 11 requests including addressing risks of trading cryptocurrencies and refraining from promoting specific kinds of virtual currency, such as bitcoins. Officials have said cryptocurrencies are used by criminals to launder money.

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