Japan Ramps Up Its Cryptocurrency Regulations

March 12, 2018         By: Steven Anderson

With reports emerging that Japan’s banking system is ready to bring cryptocurrency at least tangentially into the Japanese culture thanks to a Ripple-fueled payments app, it’s not surprising it would also want to make cryptocurrency in general safer for its users. To that end, the Financial Services Agency is taking aim at seven exchanges in the country, ordering an expansion of their security systems to better protect end users and prevent criminal acts.

The move was enough to briefly drive down the price of bitcoin, reports noted, and the effects were fairly far-reaching. Two exchanges—FSHO and Bit Station—were ordered to stop operations altogether for one month to improve security, while Coincheck landed its second notice since the second half of January.

Coincheck now has until March 22 to offer up a plan to improve security and protect against such threats as money laundering and terrorists getting their hands on cryptocurrency. The Financial Services Agency also leveled its first notice against GM Coin, reports noted.

Given that Coincheck recently got hacked to the tune of 500 million NEM tokens, it’s not surprising that the government would land on them in such a fashion. Additionally, the exchange does have at least some plan to improve its security, dating back to the hack. It noted then how it was looking toward “…overhauling and strengthening our security measures…” along with “…simultaneously continuing in our efforts to register with the Financial Services Agency as a Virtual Currency Exchange Service Provider.”

I can’t help but wonder if the Financial Services Agency is expecting too much. Protecting against money laundering and terrorist financing? Why didn’t they just ask the exchange to create a workable flu vaccine while it was at it? There’s really only so much a cryptocurrency exchange can do to protect against money laundering and terrorist financing; cryptocurrency is by its nature largely anonymous. Sure, some more so than others, but the whole point of cryptocurrency is that it’s a kind of online cash, with all that entails.

Still, extra security never really hurts, and the notion that our various coins are safe with the exchanges is important to the whole concept of a mainstream cryptocurrency. Japan may be expecting too much, but like the old saying goes, shoot for the moon, you’ll at least hit a star.