Japan’s largest cryptocurrency exchange Bitflyer has contested media reports that the Japanese financial regulator has deemed its user verification process to be insufficient. Nonetheless, the exchange admitted to being in talks with the authority and has implemented additional measures.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
Reports of Financial Regulator’s Concerns
The largest Japanese crypto exchange by volume, Bitflyer, has issued a statement in response to media reports that the Financial Services Agency (FSA) has asked the exchange to strengthen its user verification procedure after determining it to be insufficient.
Nihon Keizai Shimbun reported last week that, unlike many other exchanges in Japan, customers were able to trade cryptocurrencies at Bitflyer “even with insufficient identity verification.” According to Japanese law, customers must mail verification document to the exchange as part of the know-your-customer (KYC) requirements.
While “A normal dealer will take 1 to 3 weeks” from account opening to trading, the news outlet noted that trading within 24 hours is possible at Bitflyer. Since speculators often try to time the market and profit before the price drops, “exchange operators who can start trading earliest are attractive,” the publication explained.
Bitflyer quickly contested this report, claiming that “the contents reported are different from the facts,” adding:
The company has implemented measures such as money laundering and terrorist financing…and has been discussing with the authorities concerned.
The exchange clarified that its discussion with the FSA is healthy, emphasizing that “We are strengthening countermeasures as one of the most important management issues” throughout the company.
Recently, the FSA has been actively inspecting crypto exchanges, particularly those that have been allowed to operate while their applications are under review. Among the 16 fully licensed exchanges, only GMO Coin and Tech Bureau have been issued business improvement orders so far.
Strengthening User Verification Measures
In its statement, Bitflyer clarified that prior to offering trading services to customers, the exchange asks for “Personal information, transaction purpose, occupation, [and] PEPs (those who occupy an important position in foreign governments etc.)” Users must also submit identification materials by registered mail. The exchange clarified:
We provide services only when we can confirm the agreement of the materials…If there is an error or inadequacy, service provision will not start. Also, in the event that the address is found unknown, the sale and purchase transaction is limited immediately.
Bitflyer further detailed its fraud prevention practice for Japanese yen withdrawals to bank accounts and unauthorized IP addresses. Countries with “risks of laundering and terrorist financing are subject to strict vigilance,” the exchange detailed, adding that “We will make strict verification by strengthening our customer support system in the future.”
Despite contesting media reports, Bitflyer announced some changes “After consultation with the agency,” the exchange wrote. Effective April 26, the exchange will not allow customers to send cryptocurrencies or withdraw Japanese yen until their identities and addresses have been confirmed by registered mail. In addition, purchasing high-value goods with bitcoin through the exchange is also only possible after the exchange has received the customer’s registered mail.
What do you think of Bitflyer strengthening its user verification process? Let us know in the comments section below.
Images courtesy of Shutterstock, FSA, Bitflyer.
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