Two Japanese cryptocurrency exchanges are reportedly quitting their operations amid tighter oversight from authorities following the Coincheck hack, which saw the theft of $530 million in January.
Tokyo GateWay and Fukuoka-based Mr Exchange are withdrawing their applications to register with the country’s financial watchdog, the Financial Services Agency (FSA), according to a report from the Nikkei Asian Review. This brings the total number to have closed in the country to five. The other three being Raimu, bitExpress, and Bit Station.
In January, Tokyo-based cryptocurrency exchange Coincheck saw itself becoming the victim of hackers after they were able to gain access, resulting in the theft of $530 million worth of XEM, the native token for the NEM platform. As a result, the FSA conducted onsite inspections at all 32 crypto exchanges in the country to determine what security measures were in place to ensure customer assets were secure.
Several exchanges were ordered to improve their data security and other safeguards after they were found to be lacking, two of which were Tokyo GateWay and Mr Exchange. After the exchanges return clients’ cash and cryptocurrency holdings they will leave the exchange business, it’s reported.
In April, Japanese legislation took effect in the country requiring digital currency exchange operators to register with the FSA. Whereas, 16 have done so, the remaining 16 which hadn’t were permitted to continue operating in the country while their applications were pending. Of those waiting to receive approval was Coincheck.
However, the five cryptocurrency exchanges that have decided to cease operating in the country are five of the unregistered group. Due to the fact that the FSA has found them lacking the necessary requirements that the registered exchanges have in place many are feeling that there is little point in trying to meet the standards set.
It’s thought that further application withdrawals will be seen, and it’s believed that the FSA is giving the exchanges the chance to remove themselves voluntarily before doing so for them.