Japan is known for the popularity of cryptocurrencies in the country. In fact, regulators had no other choice but to come up with rules and regulations that will help protect the interest of investors. And for this reason, there are companies that weren’t allowed to operate as cryptocurrency exchange.
These changes followed after hacks that happened in cryptocurrency exchanges that prompted the loss of millions-worth of cryptocurrencies. Unfortunately, the regulations have prevented some cryptocurrency exchanges from operating. In fact, even Kraken chose to stay away from the country for this reason.
Seiko Noda who is the internal affairs minister for the country was recently under investigation. He denied having an interest in a crypto company that is currently under scrutiny. Since he is working as a cabinet minister, he could be accused of trying to influence a government investigation.
It started when FSA warned the unnamed company on January 12. It has been suspected of engaging cryptocurrency exchanges which the company isn’t actually registered to do. And this violates the payment services law. By October, the company offered its own cryptocurrencies.
It was reported that Noda contacted the FSA a few days after the warning that was issued by the FSA. Noda wants to know what the agency was doing with the company. And also, Noda’s office explained that it would permit a company representative in order to be part of the briefing.
On January 30, Noda acknowledged that one of his aides is in attendance during the time when the FSA representative explained the position of the government when it comes to crypto regulations.
By February, the agency then decided the unnamed company to not sell any cryptocurrencies.
Noda claims that the meeting wherein his aide was present was to get a clarification regarding the overall understanding of crypto exchanges. And also, the briefing wasn’t meant in order to put pressure on regulators.
It’s no secret that the FSA has been improving its regulations in the crypto industry as a whole. Cryptocurrency exchanges face tougher regulations considering the number of hacking incidences that happened in the country especially that of Coincheck that occurred in January.
The five-point crypto exchange agenda has been designed primarily to help improve protection on the part of the users. For instance, the exchange will have to have robust security standards. This means that coins are going to be stored offline. And also, there will be verification for currency transfers.
Also, exchanges will apply know-your-customer processes. The aim of this is to help eliminate money laundering. And for this reason, customers will need to show their identification.
Third, asset management activity is also going to be given a closer look. It has to be managed separately from corporate assets in order to prevent client funds from being used.
Next, there will be blacklisted cryptos such as Monero that offer additional privacy to its users. Lastly, the FSA will require a clear organizational structure among these companies.
These changes can be healthy for the entire crypto world. It can help develop crypto exchanges that investors can actually trust.