Japanese Financial Services Agency(FSA) will be conducting onsite inspections on a number of cryptocurrency exchange operators this week. This move is take in response to the massiv heist of Coindesk exchange.
Onsite inspections on several crypto exchanges operators
According to a media source, it has been reported that the financial regulator will conduct the on-site inspections on several exchanges. This inspection will be conducted this week that might also expand to other crypto exchanges too. FSA would be targeting several of these operators for early on-site inspections, once it concludes their vulnerability to cyber attacks. However, FSA hasn’t given any comment on the same.
It’s been only a few days when Japanese Financial Services Agency (FSA) published a list of cryptocurrency exchanges. Half of these exchanges are already licensed while the other half is currently under the review after applying for a license.
FSA : Poor risk management practices led to the Coincheck heist
The FSA’s list has been in response to the Coincheck hack where about $530 m worth of NEM was stolen. Apart from issuing a business improvement order to Coincheck, FSA also conducted an on-site inspection of the exchange.
According to a Japanese Media Source, in addition to this, the agency also ordered an internal inspection of all the cryptocurrency exchanges in Japan. This inspection is based on a checklist of 43 items that includes the report of risk and business management system as provided by FSA.These items will provide all the details of the systems to manage the customer assets and measures to counter the cyber attacks.
When FSA decided to look for any security gaps and asked for the reports, it further said in case of any vulnerability they would follow up with an onsite check. The FSA would basically review these reports and then make a decision of whether a particular exchange needs an onsite inspection.
The biggest reason for the Coincheck hack was its poor security measures against hacking and cyber attacks. The exchange was basically managing the cryptocurrency assets of its customers through a system that was connected to the Internet.
Last year, Japan became the first country to regulate the exchanges at the national level. The hack has brought the vulnerability in trading an asset in the light that the policymakers of other countries are struggling to regulate.
Apparently, as per FSA poor risk management practices led to the Coincheck massive heist and now they are feeling a need to carry out thorough investigations and inspection into all the cryptocurrency exchanges, though the agency has yet to give any official statement on it.
What do you think FSA’s inspection would do to the cryptocurrency market? Would it discourage the investors or would it help in protecting investors interest? Let us know your thoughts in our comment section below!
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I am an associate content producer for the news section of Coingape. I have previously worked as a freelancer for numerous sites and have covered a dynamic range of topics from sports, finance to economics and politics.