The Financial Services Agency of Japan (FSA) continues to fight for raising the standards of cryptocurrency exchange. This time, it was not only and not so much licensed exchanges that got to those who only applied for a license.
Published FSA test results affect 30 market participants, of which only 7 are licensed cryptocurrency exchanges. The remaining 23 are so-called authorized dealers, cryptocurrency exchanges, whose applications for licenses are pending.
The controller’s conclusions are quite unambiguous – cryptocurrency exchanges appear like mushrooms after rain, but the market, and hence the volume of transactions, grows even faster, and the exchanges do not cope with it.
Many of them simply do not have enough staff to ensure compliance with all requirements for the safety of funds and information customers, as well as to combat money laundering.
According to the report, the total turnover the cryptocurrency instruments for the year increased sixfold. At the same time, a typical cryptocurrency exchange is less than 20 people in the state, including top managers. Given the size of assets in storage, an average of over 3.3 billion yen per employee (about $ 30 million), the FSA notes.
FSA has not issued new licenses since the break-in of Coincheck – there are over a hundred applications currently under consideration by the agency. According to the Japanese press, three or four companies, including the same Coincheck, are closest to getting a cherished license.
Applications are submitted by large banks, technology companies and securities market operators, but the process moves much more slowly than they would like.
The FSA does not hide the fact that the published result of the audit also includes an educational goal – as the agency representative stated, companies that have already submitted applications “would have to examine the verification report and compare the violations and weaknesses with their situation.” The procedure for registering exchanges is changing, and the priority will be to protect investors, the regulator notes.
Recall that the same concern for the protection of investors, according to the FSA, is a strong reason for the forthcoming tightening of the rules exchange trade in cryptocurrency.
Virtual currencies should be clearly positioned as investment assets, and the legal system should protect the interests of investors, the Agency emphasizes.
Apparently, this initiative should include the preparation for changing the legal status of the cryptocurrency from the means of payment to a financial instrument, announced earlier.