Bitcoin Forum

Japan's financial regulator has ordered two cryptocurrency exchanges in the country to halt their operations for two months due to insufficient know-your-customer (KYC) procedures.

Effective immediately, the temporary ban will last until June 5 and June 7, respectively, for Eternal Link and FSHO, according to two administrative penalty orders issued by the Financial Services Agency (FSA) on Friday.

Through its months-long inspection, the agency alleged the two operators had not properly required to customers to provide information such as purposes of trades. They had also not implemented procedures around reporting suspicious transactions to the FSA.

The lack of anti-money laundering efforts on the part of the exchanges does not comply with the Act on Prevention of Transfer of Criminal Proceeds, the agency said.

Separately, the penalty order to Eternal Link also indicates that the firm had violated laws in Japan by using deposits from customers to pay for company expenses, even if temporarily.

In addition, Eternal Link, FSHO, as well as a third local exchange, Last Roots, were all found to have made insufficient improvements to their internal safety measures that guard user information against potential cyber threats, the FSA said.

The latest round of administrative penalties mark the continuing scrutiny by the Japanese regulator of the domestic cryptocurrency industry.

The new FSA suspension order sent to FSHO follows a one addressed to the firm on Mar. 8. At the time, another exchange, Bit Station, was also ordered to halt its operations, while five others were ordered to report back to the FSA regarding business improvement measures.

The FSA has been stepping up its efforts to inspect domestic cryptocurrency exchanges regarding their business operation loopholes after a heist that saw  $500 million-worth of NEM tokens stolen from the Coincheck exchange.

Source: https://www.coindesk.com/japanese-regulator-suspends-two-crypto-exchanges-over-kyc-failings/

We can see from here that the Japanese government is not playing games when it comes to getting things done. In fact, when they require something, they really make sure people follow it; otherwise, it is not a good regulation. I have been to their country and I see people in there are really obedient when it comes to the laws of the land. That is why this news came not as a surprise to me!

With this event, I do not know how the Japanese government will totally require compliance of its KYC rule in terms of handling cryptocurrencies because the nature of such business is highly imbued with protecting private interests. At best, I can see it totally banning the same in the future should people continuously disregard said government's stance.

It would be good to have government bodies do this on a global scale. If a market enjoys too much freedom due to its still unregulated nature, shitcoin exchanges as Yobit will continue to remain a relevant part of this market.

The thing is that while in general terms an exchange as Yobit is considered to be a shitcoin exchange, it isn't in terms of the value it maintains. It might very well be that they hold a few hundred million worth of crypto assets.

The same goes up for an exchange as HitBTC. No one keeps an eye on them, and no one will probably find out what happens if they claim to have suffered a massive hack theft. Not something to look forward to.

Ditch these exchanges.

Surely the Japanese government will not let businesses of this kind easy because other forthcoming businesses will emulate the ones ahead. The aforesaid government is known for being stringent when it comes to making known their laws, rules and regulations, and any violations of those will surely be dealt with accordingly. That is why I do not find this news any shocking than most people would find.

In the same vein, I hope people in cryptocurrencies will not abuse the privilege given them by the Japanese government. Otherwise, said government can easily ban all businesses that operate on cryptocurrencies either directly or indirectly.