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Japan's Financial Watchdog Asks 6 Crypto Exchanges To Improve Controls

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Japan's Financial Services Agency said on Friday that six registered cryptocurrency exchanges, including the leading ones, bitFlyer and Quoine, were asked to improve their screening measures, especially those concerning money laundering.

The six exchanges were given business improvement orders after the FSA raided their offices and found flaws in their internal controls. Their anti-money laundering measures were inadequate, the agency said.

bitbank, BITPoint Japan, BtcBox and Tech Bureau were the other exchanges that were asked to improve controls. The six exchanges are expected to submit new measures by July 23.

The Nikkei Asian Review reported that it was unusual for the watchdog to simultaneously punish so many registered exchanges.

The news caused a major slide in cryptocurrencies, including the top ones such as Bitcoin, Ethereum and Bitcoin Cash.

All exchanges covered under the latest move are Tokyo-based, except Tech Bureau, which is based in Osaka and has been punished for a second time, the Nikkei said.

Following the FSA announcement, bitFlyer said it will halt accepting new customers, instead channel efforts to improve its internal controls.

The move by the Japanese regulator comes as two South Korean exchanges were hacked recently.

Japan, which is set to chair the G20 in 2020, is the first country to implement a registration regime for crypto exchanges. The country launched the system in 2017.

Registration rules were made it strict this year following the massive hack of the Tokyo-based Coincheck exchange in January in which digital coins worth around $530 million were lost.

The FSA also carried out several on-site inspections at different cryptocurrency exchanges following the Coincheck hack.

The country has 16 registered cryptocurrency exchanges. The latest move by the FSA means 40 percent of them have been punished. Seven exchanges are waiting for approval.

Reports suggest that as much as 100 companies are interested in applying for registration despite the tightened rules.

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