The Japanese Financial Service Agency (FSA) this morning gave orders to six of the countries leading crypto exchanges to implement business improvement strategies. During an inspection, the FSA discovered a number of issues, including security issues related to anti-money laundering (AML) systems.
BitFlyer, Japan’s biggest exchange, halted the creation of new accounts in response to the new legislation. Some have surmised that this may be responsible for the massive price slide that affected crypto markets this morning, although bitFlyer is only the 23rd largest exchange worldwide by trade volume.
According to a press release on the FSA website, an overhaul of risk management practices has been requested from the six exchanges including bitFlyer, Quoine, BTC Box, Bit Bank, Tech Bureau and Bit Point. The request details improvements to the security implementations of Anti-money Laundering (AML) and Know Your Customer (KYC) infrastructure.
In relation to bitFlyer specifically, the FSA stated that an effective management system and countermeasures against money-laundering and terrorism financing had not been established.
In response, bitFlyer apologized to its customers on Twitter for any inconvenience caused. They also outlined the eleven improvements that the FSA has asked of them, including new systems for the rejection of antisocial forces, better asset and information management and improvements in customer complaint procedures.
They have until July 23rd to respond to the request.
Price Collapse Resumes
The new restrictions from the FSA come in light of recent hacks in the cryptocurrency industry, not least the $530 million Coincheck hack in January this year. Following the hack, the FSA rejected any applications for the creation of new crypto exchanges and in March ceased the operations of the exchanges Bit Station and FSHO.
The FSA also confirmed that at least one of the six exchanges may be involved with organized crime groups such as the Japanese Yakuza gang.
Following the announcement this morning, Bitcoin has now fallen back to previous lows of $6200, with the majority of other digital assets suffering a similar fate.
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