The Financial Services Agency (FSA), Japan’s financial watchdog, has added more requirements for aspiring digital currency exchanges to fulfill before they can be cleared to operate in the country.
The new requirements which will form part of the registration process have been increased four times with respect to the FSA’s previous requirements. Now, applicants will have to correctly answer close to 400 items as part of the screening process.
Some of the new requirements include the need for those applying to be registered as cryptocurrency exchanges to provide “minutes of board meetings” for the Financial Services Agency to ascertain “whether enough discussions have been held about measures to sustain the company’s financial health and ensure the security of its computer system,” reported Japan Times.
Apart from board meetings’ minutes, the FSA will from time to time review “the composition of an applicant company’s shareholders, while examining if an internal system is in place to check for links to antisocial groups.”
FSA’s stress on links to antisocial groups is one way to ensure a cryptocurrency exchange has no ties with organized criminal groups which may, in turn, encourage money laundering and financing terrorists through the use of virtual currencies.
With hundreds of applicants seeking approval to be crypto exchanges in Japan, the move by the Financial Services Agency, will, presumably, force some of the companies to withdraw their applications seeing that they have not met all the requirements.
In the past, the FSA has done spot checks on cryptocurrency exchanges to confirm that they are adhering to rules and regulations including proper Anti-Money Laundering measures.
Additionally, in the past, the FSA only asked questions surrounding the “applicant’s financial status and measures to ensure system safety.”
The Japanese financial regulator increased its regulatory hold on digital currency exchanges after Coincheck’s hack early this year which saw investors lose millions of dollars’ worth of crypto.
Do you think the move by Japan’s financial watchdog to add more requirements for aspiring digital currency exchanges is meant to make it harder for new crypto exchanges to enter the Japanese crypto market?
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