The Japanese financial regulator has targeted another cryptocurrency exchange for improvement after an on-site inspection revealed inadequate standards. The exchange must comply and submit a written report next month.
Another Exchange Punished
The Japanese Financial Services Agency (FSA) has issued another “administrative punishment order” to a cryptocurrency exchange. On Wednesday, the Tokyo-based Minnano Bitcoin received a business improvement order from the agency. The exchange’s website says its English name is “Everybody’s Bitcoin Inc.”
The order follows an on-site inspection by the FSA after the exchange submitted its system risk management report to the agency. The exchange is a “deemed dealer” of cryptocurrencies, meaning it is allowed to operate while its application is being reviewed by the agency.
Based on the report and the inspection, the FSA found problems with the exchange’s “compliance with laws and regulations and proper operation of the business.” For example, the agency found that the exchange was “not performing appropriate verification at the internal audit in addition to the inadequate management and management system.” The agency further detailed:
It [the exchange] also has the problem of preventing money laundering and terrorist financing, preparing and preserving statutory books, providing appropriate information to users, [and] effective control over system risks and outsourcers.
Minnano Bitcoin has three cryptocurrencies listed on its website: bitcoin (BTC), ether (ETH), and bitcoin cash (BCH).
The exchange is a wholly owned subsidiary of the publicly listed Traders Holdings Co. Ltd. (JASDAQ:8704), which engages in foreign exchange and securities trading in Japan. In June of last year, the exchange signed a business alliance agreement with Debit Inc regarding a fund settlement service using cryptocurrency.
The content of FSA’s Order
“The following measures [are] to ensure appropriate and reliable business operation,” the FSA wrote.
The agency ordered the exchange to improve its business in five specific ways. “Building a business management system; Establishment of a management system for money laundering and terrorist financing; Construction of bookkeeping management system; Establishment of management system related to user protection measures; Construction of system risk management system and outsourcing management system.”
The exchange must take care of these business improvement items and submit a written report to the agency by May 14.
Responding to the FSA’s order, Minnano Bitcoin apologized to its customers and stakeholders, stating:
We take this administrative punishment solemnly and sincerely, [and will] establish a posture for the proper and reliable execution of the virtual currency exchange industry, regulate the virtual currency exchange trader and recover the customer’s trust with full power.
High Turnover of Crypto Exchanges in Japan
Since the hack of Coincheck in January, the FSA has been actively inspecting and sanctioning crypto exchanges.
While only two licensed exchanges have been issued business improvement orders so far, the majority of deemed dealers have been issued the orders. Some of them have also been ordered to temporarily shut down operations while others have voluntarily withdrawn their applications.
So far, the agency has issued business improvement orders to the following crypto exchanges: Coincheck, Mr. Exchange, Bitcrements, Bit Station, FSHO, GMO Coin, Tech Bureau, Lastroots, Eternal Link, Blue Dream Japan, Bmex, and Minnano Bitcoin. Coincheck and FSHO have received two orders. Coincheck has also been acquired by a leading Japanese online brokerage firm, Monex Group.
Last month, the FSA reportedly revealed that over 100 companies were seeking licenses to operate crypto exchanges in Japan, including Line Corp which operates the popular Line Chat app. Earlier this month, Yahoo! Japan confirmed its entrance into the crypto space by acquiring a stake in a licensed crypto exchange, Bitarg.
Do you think there will be many unlicensed crypto exchanges left in Japan? Let us know in the comments section below.
Images courtesy of Shutterstock, Minnano Bitcoin, and the FSA.
Need to calculate your bitcoin holdings? Check our tools section.
The post Another Crypto Exchange Ordered to Improve by Japanese Regulator appeared first on Bitcoin News.Another Crypto Exchange Ordered to Improve by Japanese Regulator by ICO Investigate