After approval of 16 exchanges of cryptocurrencies, a rejection is on the way from Japanese Financial Regulator for the very first time. This particular applicant has been suspended twice in a row from initiating any kind of crypto activities given the fact that it has been given two consecutive orders for business improvement.
It is the very first time FSA has rejected a proposal for crypto exchange. After proper research conducted over FSHO based in Yokohama, the officials concluded that the business lacked a necessary system for proper operations. The financial agency aims to provide only the best trading environment for the country which is why it has barred any kind of substandard agency.
FSHO is a “quasi-operator” or “deemed dealer” for cryptocurrencies in the country of Japan. This means it can continue with its crypto-exchange operations while the application is still under review by the FSA. In total, Japan has sixteen deemed dealers. However, as per FSA, indications suggest that 8 of these dealers shall withdraw their respective applications.
Apart from these, Japan houses 16 completely licensed names for cryptocurrency exchanges while 100+ companies are looking forward to entering this domain which includes renowned names such as Line Corp, Coinbase, and Yahoo! Japan.
Suspended with orders for procedure and system correction
Apart from Coincheck that was hacked during January this year, FSHO has already received two punishment orders in Japan from FSA. The very first order was dated 8th March while the second was dated 6th April.
Following this, FSA suspended all the business by FSHO with regards to cryptocurrency in March. The company has issued an order for business improvement. FSA scrutinized four areas for operations improvement which includes the fact that the company needs to “Create a position for secure management of user information”. The renewal date post improvement for the company was set for March 22.
Second Suspension Order
Following the order in April, FSHO again failed to adhere to the set standards for crypto exchange which is why the operations for the company were suspended between the time periods of April 8 till June 7. Another order for business improvement followed this.
However, the 2nd order came along with five areas for improvement. Some of these were same as the ones in the 1st order. The new orders carried changes like “Establishment of a proper management system for elements such as terrorist financing and money laundering” along with a Risk-management protocol. The new changes were supposed to be reported on 7th May by the agency. As per the review of FSA, the FSHO did not accurately verify the customer identity during transactions, and it can be suspected as a crime where the deposits by the customers might be diverted.