Japanese financial watchdog, the Financial Services Agency (FSA) has made a priority of investigating two of the country’s most famous cryptocurrency exchanges: Huobi Japan and Fisco, as a procedure that followed a change of regime in both of them.
According to a report coming from international news agency Reuters, which cited two sources familiar with the matter, stated that the FSA made a visit to the two crypto trading platforms with the intention of reviewing their customer protection and anti-money laundering (AML) provisions.
Significant Changes in Management Structure
Both exchanges had endured significant alterations when it comes to the management positions, so the FSA investigation wanted to make sure that the two companies comply adequately with the watchdog’s regulations, per the sources.
The Huobi Group, originally from fellow Asian country China but with headquarters in Singapore, recently expanded its trading services to Japanese soil, when it completed the purchase of BitTrade, a licensed crypto exchange, in the month of September 2018.
Meanwhile, Fisco recently acquired the well-known Zaif platform, which was administrated by Tech Bureau in the past. Zaif suffered one of the most painful crypto hacks in recent memory, when it lost more than $60 million worth of Bitcoin (BTC,) Bitcoin Cash (BCH,) and Monacoin (MONA.)
A devastating Crypto Hacking Attack
After the devastating hacking event took place in September 2018, Tech Bureau decided that it had enough and opted to sell the business to Fisco, for a sum that hovered around the $44.7 million.
Since the event, the platform suspended new registrations, while performing critical operations with MONA (including trading, depositing, and withdrawing) had been paused. The last week, the ownership transfer to
Japan is among the worldwide leaders in Bitcoin adoption and use. In fact, it is one of the few nations that has officialized BTC as a legal payment method. But it is also very strict when it comes to regulating the activity: in April 2017, it passed a bill that brought crypto exchanges under AML and know your customer (KYC) norms; whilst also requiring platforms to be fully licensed.
Ensuring the Security of Virtual Currencies
As the Reuters report notes, the FSA is “pushing to ensure the security of virtual currencies as Japan aims to leverage the fintech industry to stimulate economic growth.”
The report seemed to suggest that there were insufficiencies, but did not provide details about potential violations. “The FSA conducted detailed checks with a view to administrative setup, considering that there are insufficient points in the management systems of the two companies and their efforts to protect customers,” it said.
Neither crypto exchange has provided public comments on the matter: according to Reuters, a Huobi representative “declined to comment on the FSA inspections or communications with the regulator. Fisco did not respond to multiple requests for comment.”
By Andres Chavez