What Makes Japan To Shut Down Two Cryptocurrency Exchanges?

Japan Cryptocurrency

There are at least two key developments in respect of cryptocurrency. One is that Japan has ordered the closure of two digital currency exchanges as part of a clean-up action after the hacking struck in February. The other was that SEC came out with clear clarifications that the virtual currency and exchanges trading them would come under its purview of laws.

On Thursday, Japan’s Financial Services Agency (FSA) has ordered two exchanges dealing with the digital currency to shut down their operations temporarily for a 30-day period. They are FSHO and Bit Station located in Yokohama City and Nagoya Prefecture.

According to the regulator, FSHO has failed to provide any effective, as well as, proper system to monitor trading in virtual currencies. These two exchanges have also not provided enough training to their employees as required. As far as Bit Station, forbes.com reported that it was suspended following a senior employee’s reported involvement in diverting cryptocurrency deposits for his own personal use. Both the incidents indicated serious absence of security.

The latest move comes amidst the $534 million hacking of Coincheck in February triggering serious security concerns on trading the digital currencies. This was a big blow considering that Japan was keen to get the tag of the digital currency capital of Asia and extend it globally too. That was primarily because of 30 percent of bitcoin transactions were done in domestic currency.

In an another interesting development, the American regulator, SEC, revealed enlarging scrutiny of companies engaged in trading of cryptocurrencies. This was in contrast to its earlier focus of developers and the digital coins.

Some of the analysts have viewed the SEC clarifications as a forerunner to some enforcement actions. CNBC has quoted analyst, Ryan Schoen, as saying that the next step would likely be subpoenas to exchanges if the regulator has not started the process yet. Another analyst, Jason Gottlieb, was also quoted as saying that the SEC’s message was one more thing of viewing the digital currencies as securities. That would mean encouraging everyone in the virtual currency space to follow the laws of the SEC.

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