Breaking news from Nikkei, Japan this morning suggests that two cryptocurrency exchanges, namely Tokyo GateWay and Mr. Exchange are to cease operations and shut down for good.
The closure of the exchanges will see both groups issue out all the customers cryptocurrency holdings before they close their doors (so to speak) for good.
This comes after new regulations from the Financial Services Agency in Japan have been set out to reduce the levels of cybercrime happening within Japanese networks as a result of un-registered cryptocurrency exchanges. As part of the new regulations, both Tokyo GateWay and Mr. Exchange where told to improve their cybersecurity and data handling processes, failure to do so will now see the companies’ close-up.
Interestingly, new reports are emerging that also suggest three new un-registered exchanges have withdrawn their applications to go live with the Financial Services Agency. Raimu, bitExpress and Bit Station have all backed out of the processes that would have seem them become brand new live cryptocurrency exchanges. Reasons for this are uncertain at the moment, although I suspect it is something to do with the complexity of cybersecurity required by the Financial Services Agency.
Whilst it does sound like a little bit of a mess, 16 major cryptocurrencies will still operate as normal with valid licenses in Japan and according to CCN, another 16 exchanges are awaiting license approval, during this time they are permitted to operate, providing their data and cybersecurity protocols are up to scratch. Therefore, within Japan specifically, cryptocurrency exchange activity is still relatively healthy.
All of this comes off the back of a hack which saw 500M NEM tokens stolen from Coincheck in Tokyo at the start of the year. This breach saw an estimated $530M worth of tokens stolen in what has been referred to as the largest exchange hack in history.
The moves by the Financial Services Agency are justified by their desire to ensure something like this never happens again. With such unsteady markets of late, the industry cannot afford to lose such huge amounts of money as a result of relaxed cybersecurity.
Cryptocurrency exchanges, above all are responsible for the holding and security of your currencies, if they don’t establish measures to keep these and your data safe then I do believe they should be held accountable. Protection, through policies such as this one set up in Japan are imperative in ensuring that the rest of the world never see’s a data breach on this scale ever again. If you do need a refresher, you can find more information about the data breach here- https://www.ccn.com/official-japanese-cryptocurrency-exchange-hacked-530-million-nem-missing/