Japan’s Biggest Crypto Exchange Halts New Account Signups As Regulators Demand Improvements

Japanese cryptocurrency exchange BitFlyer suspended new account registrations on June 21, after regulators demanded it improves its security arrangements.

BitFlyer Hit With AML/KYC Cleanup

A tweet and statement confirmed the move, which officials implemented as part of a Business Improvement Order from Japan’s Financial Services Authority (FSA). The statement reads:

We apologize to all concerned and the customers who have caused a great deal of worry and inconvenience due to this business improvement order.

BitFlyer joins a raft of Japanese exchanges which regulators have demanded change their business practices as part of an industry-wide cleanup following Coincheck’s $530 million hack in January.

While that industry is expanding at a blistering rate, extant operators have variously halted operations, received fines, or shut down completely after investigators reviewed their setups.

Demands Focus On Risk Management

BitFlyer’s order contains broadly similar requirements to that which Coincheck received following January’s exploit, including the mandatory submission of an improvement plan — which officials should submit by July 23.

The FSA identified a further eleven steps:

1. Follow measures to ensure the proper and reliable operation of the business
2. Immediate review of management system
3. Establishment of a risk management system for money laundering and terrorist financing
4. Establishment of a management system related to elimination of antisocial forces, etc.
5. Establishment of a system for separating and managing user property and management of books and documents
6. Establishment of a management system related to user protection measures
7. Build a platform risk management system
8. Establishment of a management system for the safe storage of user data
9. Build a management system to respond appropriately to complaints and consultation from users
10. Building a risk management system related to handling of new virtual currency
11. Receive verification by a third-party organization regarding the appropriateness and effectiveness of the improvement contents of 1 to 9 above.

For users, the effect of the changes may manifest in the need to resubmit identification documents or provide additional ones.

While Japan has yet to see another exchange hack, South Korea became the latest victim of malicious attacks this week when its largest exchange, Bithumb, confirmed the loss of around $30 million.

What do you think about BitFlyer’s AML/KYC obligations? Let us know in the comments section below! 

Images courtesy of Twitter/@bitFlyer.