Japan’s FSA Publishes Results Of Its Crypto Exchange Operators

The Financial Services Agency (FSA) of Japan has published the results of its on-site inspections of crypto exchange operators. The agency has decided to apply more stringent oversight into new applications from exchanges, based on its findings. Exchanges which are newly registered and hoping to receive an official operating license will have to undergo on-site inspections at an early stage. The agency also plans to closely examine the effectiveness of their business models.

The agency stated that presently there are hundreds of companies lined up for its review. A key point revealed during the FSA probe is that the exchange operators’ maintenance of their internal systems has failed to keep pace with the rapid growth of transaction volumes. This is, however, partly attributed to the renaissance of the crypto markets in the Autumn of 2017.

As per the published Japan FSA results, the total digital assets of domestic exchanges surged to 792.8 billion yen ($7.1 billion). This volume is an over six-fold increase within a year’s time span. The workforces of most Japanese exchanges are fewer than 20 people. This means that on an average, one employee was found to be managing digital assets worth 3.3 billion yen ($29.7 million).

The result document also identified a range of issues across the business models of exchanges, internal audits, risk management and compliance, and corporate governance. The FSA raised concerns over insufficient anti-money laundering measures in certain crypto exchanges, as stated in the Cointelegraph report.

With the publishing of this report, there is a high possibility that the new registration of exchange operators which had ceased in Japan after the Coincheck crypto exchange hack will resume following the publishing of FSA results. The agency said that the ongoing review of registration procedures will be important and it will continue giving priority to investor protection.

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