The Japanese Financial Services Agency (FSA) has 5 new rules for all crypto exchanges. All new and existing exchanges must follow these rules.
According to Nikkei, The FSA aims to protect the assets of the customers. Also to promote compliance for crypto exchanges. This is all due to the recent attack on the exchanges which took place. Coincheck lost $ 531 million USD worth of cryptocurrency in January. This was due to a hack on the crypto exchange.
The FSA states that this five criteria will help the exchanges be safe. also, this is the part of the registration process for crypto exchanges.
The Five Criteria’s by FSA
The Exchanges must not store cryptocurrency in any internet connected computers. Also, have to set multiple passwords for cryptocurrency transfers.
The Exchanges need to verify customer identity for large transactions. thus, this will prevent money laundering through any exchanges.
The Exchanges have to carefully manage customer assets. The customer assets must be kept separate from the exchange assets.
Cryptocurrency having high anonymity needs to be delisted. An example such as Monero. Because high anonymity could lead to money laundering.
All roles on the exchange platform should have different privileges. System development roles need to be separated from asset management roles. This is to prevent employees from manipulating the system for their benefits.
These five rules are mainly meant to identify risks in advance. This will be applied on new registering crypto exchanges and also existing once. In Japan right now 16 crypto exchanges are already registered under government. But, Recently we saw that karken crypto exchange is suspending its services in Japan.
What do you think about this FSA rules? Let us know in the comments below.
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