Since the infamous Coincheck hack in January that saw over $500 million in NEM stolen, Japan’s FSA (Financial Services Agency) has started improving the security of crypto exchanges. Nikkei reported on Thursday that two crypto exchanges in Japan have withdrawn their applications to operate.
Contrary to misleading articles, Tokyo GateWay and Mr. Exchange have voluntarily withdrawn their applications to operate as crypto-asset exchanges in Japan.
It is thought that Tokyo Gateway and Mr. Exchange had insufficient security procedures and standards making it highly unlikely that they would have met the FSA's stricter requirements. Making an application to operate a fruitless endeavour.
The FSA ordered all crypto exchanges to improve security in the wake of the Coincheck hack. Two exchanges - Bit Station and FSHO - were suspended for 30 days and 5 exchanges - Tech Bureau, GMO Coin, Mister Exchange, Bicrements and Coincheck - had to conduct a full security audit and provide a “Security Improvement Plan” by March 22nd.
Japan’s Crypto Markets Mature Under FSA Guidance
Despite the numerous reports of Japanese exchanges being forcefully closed down the reality is different. The FSA has imposed security standards to help prevent Coincheck or MtGox style hacks. A process that has fortunately identified several security flaws in numerous exchanges. These exchanges have been left with a choice of improving security or shutting down. It is the FSA’s hope to mature the crypto market and improve standards.
As the volumes of crypto-asset trading falls and competition ramps up, the crypto exchange business model is becoming less lucrative. Analysts expect the number of exchanges to drop and the market to consolidate around a small group of exchanges. However, it is thought to be a positive progression for the market improving liquidity and security.