Japan’s largest Bitcoin exchange has announced that it is suspending its account creation for new customers following a business improvement order from the country’s financial watchdog.
Tokyo-based bitFlyer posted a statement on its website today declaring that:
“Our management and all employees are united in our understanding of how serious these issues are, as well as how serious we are in responding to them going forward.”
The business improvement order follows months of on-site inspections from Japan’s Financial Services Agency (FSA), which were conducted over recent months. As a result, bitFlyer has said that in order to build a suitable service and improve on issues identified, it has ‘temporarily suspended account creation for new customers of our own volition.’
In an announcement from the FSA, it stated that after an inspection by the agency, ‘…an effective management system has not been established to ensure proper and reliable operation of the business, as well as countermeasures against money laundering and terrorist financing.’
News of this comes six months after bitFlyer was granted a payment institute license to operate in the EU. A report in January stated that it was the first Bitcoin exchange to be regulated in Japan, the U.S., and Europe.
The financial watchdog also issued business improvement orders to five other licensed cryptocurrency exchanges: QUOINE, Bit Bank, BTC Box, Bit Point, and Tech Bureau to build on measures in place for consumer protection and its internal control system. Several exchanges waiting to be registered have already withdrawn their applications amid tightening regulations.
Japan is considered one of the most crypto-friendly jurisdictions. Last April, legislation was changed that saw Bitcoin becoming a legal form of payment in the country, enabling the digital currency to grow in Japan.
The FSA, however, has stepped up its efforts to ensure the country’s crypto exchanges have the correct measures in place following the hack at Coincheck. In January, the Tokyo-based cryptocurrency exchange was the victim of a hack that resulted in the theft of $530 million worth of NEM.
Since then, sixteen of Japan’s licensed digital currency exchanges have set up a self-regulatory body to build trust in the crypto industry. It was reported earlier this week that the Japan Virtual Currency Exchange Association had drafted new regulations that would prevent insider trading and the trading of new currencies that can be traced easily. The association will vote on the proposal on the 27th June. Once it is recognised by the FSA as a self-regulatory body it will adopt the rules, reports the Nikkei Asian Review.