Japan is one of the very few countries which has completely legitimised cryptocurrencies along with allowing cryptocurrencies to be used as a legal tender. But Japanese exchanges have been notorious for hacks. Mt. Gox, the biggest cryptocurrency exchange at the time was hacked in 2013 where millions of dollars worth bitcoin was lost. But a bigger hack occurred this year when more than $500 Million worth NEM was stolen from Japanese exchange CoinCheck.
CoinCheck stored all their NEM on a wallet connected to the internet, making it extremely easy for hackers to get hold of. These hackers have already successfully laundered most of the stolen NEM. To ensure a similar hack does not happen, FSA has sent out new requirements which existing and future exchange will have to follow.
The biggest requirement is that exchanges will ha vet o store cryptocurrencies in an offline cold wallet. Also, these wallets will have to be Multisig wallets that require multiple passwords to transfer funds.
Another requirement is something they’ve been saying for a while. Exchanges will have to do enough to make sure they do everything that possibly can to prevent money laundering. Exchanges will have to compulsorily verify customers before major transfers. Exchanges will also have to make sure their employees are not on the exchange.
Also, Japan has not been very favourable of anonymous cryptocurrencies like ZCash. So there will be new rules regarding the kind of cryptocurrencies that can be traded in Japan. Stricter rules will have have to be in place to make sure there is no collusion within an exchange.
Once the new standards are in place, FSA will have agencies physically visit exchanges to make sure all rules are being followed. Though Japan has been extremely Crypto friendly, people fear extra regulations after the CoinCheck hack would stop development.
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Topic: Japan announces stricter exchange regulations to prevent future hacks (Read 931 times)