Category Archives: Coincheck

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Coincheck Granted Exchange License a Year After Major Hack

Coincheck Granted Exchange License a Year After Major Hack

Japanese cryptocurrency exchange Coincheck has been granted an operating license a year from its notorious hack that resulted in a loss of USD 530 million.

Effective immediately as of 11 January 2019, Coincheck is now registered with the Kanto Financial Bureau. This will be its first time operating as a licensed cryptocurrency exchange.

In January 2018, Coincheck suffered a security breach which resulted in the theft of USD 530 million in New Economy Movement (NEM) tokens. The firm has said that it has since then adequately addressed any and all security concerns with the platform.

In order to receive the license, Coincheck was required to meet both Japan’s regulatory requirements and prove to the regulators that internal controls had been established to adequately protect investors on its platform. Coincheck claims it has established ”concrete internal controls” and a ”basic philosophy on risk management” to ensure another breach will not take place.

The management of the exchange has also been adjusted, with chief executive officer Koichiro Wada and chief operating officer Yusuke Otsuka both being replaced within the company. Privacy coins such as Dash and Monero were required to be delisted from the platform before it received its license, with the Japanese regulators citing that they failed to comply with anti-money laundering regulations.

Even with an official license granted, Coincheck will still have to win back its reputation to bring in new traders and re-establish itself as a secure platform.

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Japan Releases New Draft Crypto Regulations to Safeguard Investors

Japan Releases New Draft Crypto Regulations to Safeguard Investors

Japan’s Financial Services Agency (FSA) responsible for regulation has published a report outlining its proposals for changes to the current rules which govern cryptocurrency exchanges.

The main purpose of the updated rules is primarily aimed at addressing hacking incidents, self-regulation, deemed dealers, privacy coins, and margin trading. The framework, which also targets ICOs, was established after 11 meetings of the FSA study group.

Last month, FSA’s Study Group on Virtual Currency Exchange Industry concluded its tenth meeting. The group classified tokens according to three categories: virtual currencies with no issuers (like Bitcoin), virtual currencies with issuers, and virtual currencies that not only have issuers but also distribute profits.

According to the FSA, no major barriers prevent the new regulation becoming law and the heightened focus on cryptocurrency by the agency is thought to be a result of highly publicized hackings earlier in the year. The new laws are aimed at preventing such incidents by strengthening the management of customer property to safeguard investors.

New regulations will demand that exchanges have net assets “equal to or more than the amount equivalent to the currency and repayment funds” and also outline measures which cryptocurrency exchanges can employ to safeguard against bankruptcy.

Japan has been developing strict measures to safeguard the space since cryptocurrency began to gain huge popularity in the country. In October, industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA), were approved by the FSA to be officially recognized in its regulatory position.

Under the new regulations, Japan will refuse registration to those companies who neither “join the accredited association and conform to the self-regulation” nor establish self-regulation. There are currently “three deemed dealers” awaiting approval: Coincheck, Lastroots and Everybody’s Bitcoin.

Such companies are not permitted to advertise aggressively and expand their business while waiting for approval, nor are they able to acquire new customers during this period. Deemed dealers are also required to post their registration status on their websites to clarify their trading status for customers and potential clients.

The report also noted that ICOs “can be subject to the securities regulation” under the Financial Instruments and Exchange Act or the Fund Settlement Act.

 

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Coincheck Resumes Full Operations After Months of Post-Hack Suspension

One of Japan’s largest cryptocurrency exchanges, Coincheck, announced today in a press release that it has resumed its trading activities on assets Ripple (XRP) and Factom (FCT), thus making all assets on its platform fully available for trade.

It finally resumes full trading activities with the deposits and buying of these two assets after months of suspension following a hack in January that left the exchange vulnerable with NEM cryptocurrency deficits worth USD 530 million.

The hack exploited the exchange’s hot wallet which prompted a sequence of security upgrades and an eventual USD 34 million buyout by Monex Group two months later.

In the document, the exchange clarified that it had taken actions to protect its clients, stating, “Coincheck had suspended certain services in order to protect the integrity of customers’ assets and to investigate the cause of the breach to its system.” The exchange’s activities were gradually resumed alongside several security upgrade verifications.

Firstly, they resumed JPY withdrawal in February 2018 running through March and June of this year. Next, the exchange resumed new account opening on 30 October followed by deposits and purchasing of some cryptocurrencies including BTC, ETC, LTC, BCH. Then, ETH, XEM, and LSK trading activities were resumed on 12 November, the exchange is fully operational with all tradable assets now available on the exchange upon the resumption of XRP and FCT services.

The expectations of customers would be built upon the rehabilitated exchange under the new management which promises to provide a secure environment for customers and to grow sustainably as a socially valuable cryptocurrency exchanger.

Further, Monex will combine its expertise with that of Coincheck, leveraging on their experience in the financial industry and with the blockchain technology.

 

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Japanese Crypto Industry Granted Self Regulatory Status

Japan’s cryptocurrency industry self-regulators, the Japan Virtual Currency Exchange Association (JVCEA),  has been approved by the national Financial Services Agency (FSA) to be officially recognized in its regulatory position, effective immediately.

As reported by Bitcoin News in August, JVCEA applied for recognition from the FSA after establishing a 16 member strong team of licensed cryptocurrency exchanges and producing a nearly 1,000-page report on self-regulatory guidelines for crypto trading platforms to adhere to. Following the USD534 million heist that took place on the local Coincheck platform earlier this year, JVCEA is looking to prevent further incidents by imposing themselves as security inspectors.

Alongside monitoring security measures, JVCEA will handle other specific tasks such as evaluating the integrity of initial coin offerings (ICOs).

The FSA details in its terms of acceptance that the new regulators must issue each cryptocurrency exchange working guidelines, as well as elaborate on the anti-money laundering (AML policies). It must also enforce a set of rules that protect investors’ assets.

JVCEA has already published its key guidelines for cryptocurrency exchanges online, which have gone into full effect now the FSA has officially approved. Officially sanctioned insider bodies already exist in industries such as securities brokerages.

Speaking to Reuters anonymously, an FSA official said that self-regulation of the industry would be more efficient than the Japanese government, with industry leaders more equipped to deal with the fast-paced changes, adding ”It’s better for experts to make rules in a timely manner than bureaucrats do.”

Currently operating with 15 employees, the new watchdog plans to increase this to 20 by next month.

The FSA’s approval keeps Japan on track with some of the most progressive cryptocurrency regulations of any country. Last year it became the first nation to regulate cryptocurrency exchanges, requiring them to register with the FSA.

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Japanese Regulators Introduce New Crypto Exchange Screening Rules

Japan is to tighten some of its screening procedures for government approval for cryptocurrency exchanges.

A Japan Times report suggests that the Financial Services Agency (FSA) has “tightened its registration screening for cryptocurrency exchanges to see whether they are properly conducting risk management”, although the report hasn’t been confirmed by Japanese authorities.

According to sources, these new measures would essentially delve deeper into the nature of the applications than is currently the norm for applicants when making a case to operate in Japan, with a four-fold increase in questions. It is reported that possible links to antisocial groups will now be investigated and companies decisions making processes. The unnamed source stated on the weekend that the FSA had:

“…increased the number of questions asked when screening applications to about 400 items, up fourfold…Previously, the questions only covered such items as an applicant’s financial status and measures to ensure system safety.”

The FSA is cleaning up its act somewhat after recent hackings, notably following Tokyo-based Coincheck’s exchange was compromised to the tune of roughly USD 530 million. It followed this up by a series of onsite inspections recently which revealed that best practice was not being observed by many exchanges.

A key finding of the report following the last FSA inspections was that exchange’s internal control systems were showing signs of lagging behind, given the rapid increase of transactions; an increase partly accredited to investors climbing back into the market after 2017 recent falls. The Japan Virtual Currency Exchange Association (JVCEA) had called for trading limits in line with FSA suggestions earlier this year.

As part of the newly heightened examinations of exchange applications by the FSA, the agency earmarked six fully-licensed crypto exchanges which have been served with business improvement orders. Also, 13 exchanges who are operating whilst waiting for approval have withdrawn their applications, indicating just how rigidly they expected to be examined under the new application guidelines. Only three exchanges are left operating awaiting vetting by the FSA: Coincheck, Lastroots, and Everybody’s Bitcoin.

Due to Japan’s vibrant cryptocurrency space, there are estimated to be about 160 exchanges hoping to enter the Japanese market. The JVCEA recommended its own “appropriate regulations” for growth by proposing new rules that would affect the way exchanges operate, placing privacy coin listings and insider trading under the regulatory microscope.

 

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