Financial observer in Japan will consider unlicensed crypto exchanges

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According to the Japan Times, the country's financial services minister Taro Aso said at a briefing that on-site inspections will be carried out by exchange providers that have applied for licenses but have not yet been approved.

This step occurs after the Coincheck exchange lost NEM tokens worth $ 533 million at the time as a result of a serious breach at the end of January.

The minister said that the inspections will consider the procedures for the technical safety of exchanges and the management of user facilities, the report says.

The country's financial observer, the Financial Services Agency (FSA), had previously ordered all the licensed and unlicensed exchanges in the country to report its security protocols and burglary resistance in response to Coincheck's theft. The FSA has now decided that on-site inspections are necessary for unlicensed operators after evaluating their reports.

The Japanese system of exchange licensing came about after the country amended its laws on payments, recognizing cryptocurrencies as a method of legal payments in April 2017.

Coincheck had not been approved by the FSA, but had been allowed to continue operating while the review process was underway.

In separate news, the FSA earlier this week issued a warning to a foreign cryptocurency company that allegedly offers unlicensed financial instruments. This step, marked by the first regulator in Japan, had issued a warning over cryptocurrency services company, as the country legalized bitcoin as a method of payment.