According to a statement from its operators, cryptocurrency exchange platform Coincheck has gotten the blessings of the regulators to run its operations, joining the exclusive lists of regulated exchanges in Japan, a year after it was hacked. An official communique released on January 11, confirmed that the Japanese Financial Services Agency (FSA), through the Kanto Financial Bureau, has granted Coincheck the full permission to operate in the country as a registered cryptocurrency exchange platform under the Payment Service Act effective immediately.
The document reads:
“With the registration as a cryptocurrency exchange agency serving as a milestone, Coincheck strives to continue offering reliable services for our current and prospective customers in a safe and stable manner. Coincheck is also committed to further strengthening security and enhancing usability.”
Stringent Approval Terms
The service approval is effective immediately, and it is said to enforce strict rules, privacy terms, and clear regulatory measures.
As part of the terms of the approval, Coincheck is mandated to introduce Know-Your-Customer (KYC) procedures as well as multiple passwords before money transfers can be effected on its platform. In addition to that, the platform is not allowed to make offerings of anonymous virtual coins (including Dash and Monero), as the FSA alleges that these assets are usually used by criminals to cover some of their illegal activities.
Coincheck is also mandated to store its clients’ assets in offline devices (also known as “cold storage”) and ensure that customers’ funds are managed separately from the exchange’s accounts.
The Coincheck Hack
Monex Group, the parent company of Coincheck, stated that the license was approved based on the exchange’s ability to show that it has implemented improved safety, governance and risk management measures, with an emphasis being put on ensuring “concrete internal controls and customer protection.”
This was a mandatory criterion for the exchange to resume services, as it was hacked back in January 2018, in an attack that resulted in the theft of NEM and other altcoins, with a total value of about $530 million. In the wake of the attack, the exchange was forced to suspend its general activities for some months, while it worked in conjunction with the authorities to track down the stolen tokens and ensure proper compensation of affected customers.
In addition to suspending its operations, the exchange was ordered by the FSA to implement structural improvements to its security systems and submit a plan that outlined its strategy for ensuring an improvement in business management.
The Hunt for Certification is Finally Over
The reputation of the exchange was primarily on the line as at the time of the NEM hack, as it was operating without a proper license. In a deal worth $33.5 million, the exchange was purchased by the Monex Group in April 2018 having been run by its founders Yusuke Otsuka and Koichiro Wada since it was launched in 2012.
Coincheck eventually resumed its operations in November 2018, restoring services for all the listed digital assets on the platform. At the time, the exchange reinstated services for all nine cryptocurrencies offered on the platform, at the time of the hack and it opened its doors to new account signups, about the same time. Coincheck had reportedly gotten a temporary license from the FSA, while it worked on getting the proper license from the regulator, in a bid to stage a comeback as a regulated digital asset platform.
With its newly acquired license, Coincheck is the latest in the list of cryptocurrency exchanges that have gotten permission to operate in Japan, joining services such as VCTRADE, which functions as a subsidiary of financial giant SBI Holdings.