Six fully-licensed Japanese cryptocurrency exchanges have responded to the business improvement orders issued by the country’s top financial regulator. Two executives have also resigned from their positions as vice presidents of the recently formed crypto exchange association.
Japan’s top financial regulator, the Financial Services Agency (FSA), issued business improvement orders to six regulated crypto exchanges on June 22. Japan currently has 16 regulated crypto exchanges in total. Bitflyer, Bitpoint Japan, Btcbox, Bitbank, Quoine, and Tech Bureau received instructions to improve their crypto exchange businesses. Out of the six, only Tech Bureau has received two such orders.
Crypto Exchange Association
The Japan Virtual Currency Exchange Association (JVCEA), founded in March, consists solely of the 16 government-approved crypto exchanges. It was formed in response to the hack of Coincheck in order to restore public trust in the industry.
The chairman of the association is Taizen Okuyama of Money Partners. There are four directors: Bitflyer’s Yuzo Kano, Bitbank’s Hiroyuki Noriyuki, SBI Virtual Currencies’ Yoshitaka Kitao, and GMO Coin’s Tomitaka Ishimura. While GMO Coin did not receive a business improvement order on the 22nd, it received one in March.
On Monday, June 25, the association announced that two of its vice chairmen have resigned, stating:
In response to the fact that vice chairmen of the association, Yuzo Kano and Hiroyuki Noriyuki, representative directors of Bitflyer Co. Ltd. and Bitbank Corporation, received business improvement orders concerning their virtual currency exchange businesses, we inform you that we have received resignation requests from both of the vice presidents on this date and have accepted them.
The association continued to detail, “we will continue to do our utmost to protect the interests of users and to promote the sound development of the virtual currency exchange industry, including the early establishment of voluntary regulation rules.” Prior to the two resignations, local media reported that the association was going to release self-regulatory rules this week; the association has not confirmed any specific details.
Crypto Exchanges’ Responses
Japan’s largest crypto exchange by volume, Bitflyer, announced on the same day as the FSA order its plans to improve a number of business areas. The exchange has also halted new user registrations and will strengthen its account verification process for existing users, as news.Bitcoin.com previously reported.
Bitbank explained that it is reviewing “the internal control system and management system” in order to “ensure proper and reliable operation of the business towards customers’ recovery of trust.” The exchange emphasized that there is no impact to customer assets. A sophisticated management system will be established as the company works closely with the authorities, the exchange elaborated:
There will be no impact on various services and customer assets provided by our company due to the business improvement order this time. You can use the service as usual for all transactions / functions including deposits and withdrawals of Japanese yen.
Bitpoint Japan wrote, “We sincerely apologize for any inconvenience caused to you and other concerned customers,” adding that it will “promptly enhance and strengthen the management control system.”
Btcbox similarly declared, “We take the situation sincerely, we deeply reflect on it,” noting that it will build a management system as directed by the FSA’s order.
Quoine’s CEO, Mike Kayamori, detailed how his exchange will comply with the FSA order. He explained that the order is about “governance, compliance, back-office, KYC and AML,” not security or theft, elaborating: “we will need to pull out some necessary resources, especially from the back end developers who will need to provide the necessary data to comply and work with the FSA.” He further clarified that it means pulling “key people” away who are currently working on his exchange’s Liquid platform to work with the FSA instead, elaborating:
We believe this will be about a month or two process and business will be as usual.
Zaif, operated by Tech Bureau, also responded, referencing the March business improvement order. In addition to complying with the previous order, two more areas will be improved. The first is the “Establishment of an effective risk management system” and the second is the “Establishment of a system to respond appropriately to customers.” The exchange wrote:
We sincerely accept that we received the improvement order again. To make it possible for customers to use it with confidence, we will endeavor to further improve and strengthen the organization and work together throughout the company so that we can establish an appropriate management system.
What do you think of the responses by the six Japanese crypto exchanges? Let us know in the comments section below.
Images courtesy of Shutterstock, Bitflyer, Bitbank, Bitpoint, Tech Bureau, Quoine, and Btcbox.
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