In an attempt to make the Crypto market more secure, Japan, through the Financial Services Agency (FSA) has introduced new requirements for Cryptocurrency exchanges in the country. The financial regulator now requires the exchanges to provide minutes to back and validate their decision-making process. The new move will help in identifying whether the exchanges are conducting risk management in the right way. Japan is determined to maintain a leading role in Cryptocurrency regulation and become the preferred destination for blockchain and Crypto firms.
New Requirements For Cryptocurrency
Cryptocurrencies wishing to operate in Japan will now have to meet new requirements recently introduced by the country’s financial regulator. The new requirements have been introduced with the aim of checking whether the companies are conducting risk management according to the Japan Times.
According to the news outlet, the Financial Services Agency (FSA) has introduced new questions in the application and the exchanges will be required to respond to about 400 items from about 100. Previously, the exchanges were only required to respond to questions about their financial health and system safety measures.
Under the new requirements, the applicants will have to supply the FSA with minutes of board meetings to establish if the exchanges have conducted enough discussions on their financial health. The minutes will also make it easy for the financial regulator to check on the security of the applicants’ computer system.
The new requirement will see the financial regulator peruse the records of previously held meetings and enable it to check and confirm the involvement of company executives in decision making. The agency will also be checking on the composition of the exchange’s shareholders. At the same time, FSA will also check the applicants have installed an internal system to scrutinize connections to antisocial groups.
Most Exchanges Have Sloppy Internal Controls
Since January this year, FSA has been conducting on-site inspections on all the 23 exchanges in the country to ensure the systems are secure. According to the agency, the companies have sloppy internal controls. Most of the exchanges also don’t have board meeting minutes the news outlet revealed. After the inspection, the regulator issued 6 Cryptocurrency exchanges with improvement orders.
Last week, FSA said that about 160 Cryptocurrency exchange companies have applied to operate in the Japanese market. This is a significant increase given that the agency had earlier revealed a figure of 100 companies. Japan has emerged Crypto friendly country and has seen more companies interested in joining the market.
Japan’s Crypto Policy
Whereas most countries have been unsure of how to approach Cryptocurrency, Japan is among a few of those who have already taken sides. The country has been supportive of this innovation and has turned to regulation to make the sector even more secure and beneficial. The decision by the government has seen more Crypto firms relocate the country.
Apart from creating job opportunities, Japan’s Crypto friendly policy has enabled the local population to enjoy the benefits that come with the virtual currency such as reduced transaction time and costs. Companies wishing to adopt blockchain and Cryptocurrency are finding it much easy to operate in Japan.