The cryptocurrency market has swung violently back into the red due to a series of regulatory movements from Asia, spooking skittish market participants. Bitcoin and Ethereum plummeted by almost 10% as Japanese regulators crack down on exchange action.
Crypto markets are bleeding red subsequent to a Japanese financial watchdog move that saw business improvement orders issued to six of the largest Japanese cryptocurrency exchanges. The orders will force BitFlyer, QUOINE, Tech Bureau, Bit Point, BTC Box, and Bit Bank to improve internal auditing and AML practices.
Japan’s FSA Announces Crypto Crackdown
The FSA delivered the business improvement orders on June 22, 2018, with Bitflyer— the largest cryptocurrency exchange in Japan by volume — delivered with an “administrative penalty” order from the financial regulator.
The order presents the exchange with a series of demands including the development of a risk management system to prevent money laundering and terrorist financing as well as the enhancement of existing user information security practices.
The FSA’s business improvement orders come as a follow-up to a series of exchange inspections earlier this year. With the administrative penalty order issued to BitFlyer referenced the fact that an “effective management system” was not established in a manner to “ensure proper and reliable operation of the business, as well as countermeasures against money laundering and terrorist financing.”
BitFlyer Shuts Down New Registrations
BitFlyer has taken drastic action in response to the FSA business improvement orders, halting all new account registrations. In an announcement published on June 22, BitFlyer delivered an official response emphasizing the focus on mandatory ID verification in Japan:
“The order received by bitFlyer Japan relates to the compulsory ID verification procedures of our operations in Japan. As a result, we will be re-examining the ID verification for certain existing customers. To ensure this process is completed quickly and effectively, we will be voluntarily and temporarily suspending the onboarding of new customers.”
The six exchanges hit with business improvement orders are expected to deliver a written report to the FSA on the status of business changes by July 23, with additional reports expected by the regulatory body should requirements not be met by the deadline.
Bitcoin, currently ranked #1 by market cap, is down 9.44% over the past 24 hours. BTC has a market cap of $104.33B with a 24 hour volume of $5.06B.
Chart by CryptoCompare
Cover Photo by Lin Mei on Unsplash