Japan’s Financial Services Agency has decided to approve Coincheck’s cryptocurrency exchange license. Earlier in January Coincheck was hacked and over $500M was stolen.
At the time of the hack, Coincheck was Japan’s largest cryptocurrency exchange. The theft forced Coincheck to halt trading, leaving its clients with no sell option as the market went into a long tailspin.
After Coincheck was hacked, the FSA twice ordered the exchange to improve its business operations; the agency found it was unprepared in regard to customer protection and money laundering.
The FSA judged that the company improved customer protection and other systems after being purchased by online brokerage Monex Group in April and therefore Coincheck will regain its license to operate as an exchange in Japan.
Now a subsidiary of Monex Group, Coincheck has taken measures to revise how it selects what cryptocurrencies it will handle. After considering the cryptocurrency market’s fall, Coincheck compensated its clients to the tune of 46 billion yen.
The FSA’s decision to grant a license to Coincheck is expected to trigger the resumption of the agency’s approval process. Nearly 200 companies are said to be waiting for licenses, but only about 50 are believed to have a solid plan for the FSA’s approval.
In deciding whether to grant licenses, the FSA will scrutinize business plans, anti-hacking measures and the effectiveness of shields put up against other misconduct. Exchanges applying for approval will have to answer a 400-item questionnaire.
The FSA’s strict screening of Coincheck was also meant as a message to other exchanges that they should voluntarily exit the market if they are unable to meet high standards required by the FSA.
Speculative activities will also be curbed once exchanges adopt the Japan Virtual Currency Exchange Association’s self-imposed rules. Leveraged transactions for currencies will be capped at four times traders’ deposits, compared with 25 times now.