Japan’s financial regulator, the Financial Services Agency (FSA), will fortify the process of registration screening for cryptocurrency exchanges, local media outlet The Japan Times reports September 2.
The FSA has ungraded the registration process, revising the Payment Services Act — enforced since April 2017 — in order to “to see whether they [crypto exchanges] are properly conducting risk management,” sources told The Japan Times.
The financial watchdog has added several new features to the previous act’s legislation, increasing “the number of questions asked when screening applications to about 400 items, up fourfold”.
The FSA also will now require access to the crypto exchanges’ board meetings records, as well as reviews of the composition of the company’s shareholders in order to “check for links to antisocial groups.”
According to The Japan Times, crypto exchanges must “submit minutes of board meetings so it can check whether enough discussions have been held about measures to sustain the company’s financial health and ensure the security of its computer system.”
In August, the FSA had released the results of its on-site crypto exchange inspections —
implemented after January’s $532 mln hack of crypto exchange Coincheck — reporting that the agency plans to closely scrutinize the effectiveness of newly registered crypto exchanges’ business models.
Later in August, Toshihide Endo, the commissioner of Japan’s FSA, told Reuters that he sees the agency’s goal for developing the crypto industry as allowing it to “grow under appropriate regulation.”
Back in July, the FSA had been considering changes in the legal basis for cryptocurrency exchange regulations, with a potential shift from the Payment Services Act to the Financial Instruments and Exchange Act (FIEA).