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There are no Plans to Curb the Japanese Cryptocurrency Market, Says FSA Commissioner

The commissioner of Japan’s Financial Services Agency (FSA), Toshihide Endo has declared that the regulatory body prefers to pursue a more measured approach to regulating the country’s cryptocurrency space. The FSA has taken strict measures against defaulting virtual currency bourses in Japan after the January Coincheck hack saga.

A Measured Approach to Cryptocurrency Regulations

Speaking in an interview with Reuters, the FSA commissioner promised more moderate regulations. He said that his agency would strive to find ways of adequately regulating the digital currency market in the country. According to Endo, the Agency wishes to develop a regulatory framework that balances the need to protect consumers while not at the same time, stifling the growth of the industry.

Commenting on the matter, Endo said:

We have no intention to curb (the crypto industry) excessively,” he said. “We would like to see it grow under appropriate regulation.

Endo’s comments came as part of a wide-ranging interview session where the FSA chief spoke about numerous aspects of the Japanese financial space.

Post-Coincheck Cryptocurrency Space in Japan

The Japanese cryptocurrency industry has come under increased levels of scrutiny in the aftermath of the Coincheck hack. In January 2018, Coincheck – a prominent exchange platform at the time suffered a devastating cyber-attack. Hackers stole more than half a billion U.S. dollars in NEM tokens.

After the Coincheck hack, the FSA increased its oversight activities over the exchange platforms in the country. A thorough investigation by the agency unearthed alleged sloppy practices on the part of these platforms. According to the FSA, many of these cryptocurrency exchanges lack robust internal anti-money laundering (AML) protocols, as well as inadequate security infrastructure.

Since then, many platforms have suffered run-ins with the Agency including Binance which contributed to the exchange behemoth orchestrating a move to Malta. The FSA had already pioneered the idea of a national cryptocurrency exchange regulatory framework in 2017, making Japan the first country to have such a structured government oversight of the nascent industry.

In April 2017, the FSA passed a revised services payment code which the agency mandates all platforms to obey. The code which in effect recognized Bitcoin as legal tender also established defined operational provisions for cryptocurrency exchange platforms.

What do you make of FSA Commissioner – Toshihide Endo’s assurance of a more measured approach to cryptocurrency regulations in Japan? Keep the conversation going in the comment section below.

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Crypto Exchange Coincheck’s Owner Monex Reveals Plans to Open US Trading Platform

Online broker Monex Group, which bought out hacked Japanese cryptocurrency exchange Coincheck this spring, plans to launch a U.S.-based trading platform, Cointelegraph Japan reported today, July 27.

A summary of data from a financial briefing held Friday confirms plans to establish TradeStation Crypto Inc. as a cryptocurrency-focused subsidiary of securities brokerage firm TradeStation, which Monex acquired in 2011.

As Cointelegraph Japan reports, Monex CEO Oki Matsumoto also signalled Coincheck –– which Monex purchased in April for around $33 mln –– should begin functioning fully next month.

Matsumoto had originally forecast a June opening for Coincheck, but delays in securing a licence from Japan’s financial regulator the Financial Services Authority (FSA) resulted in this being pushed back, Cointelegraph Japan reports.

As a source told Cointelegraph, the CEO “is confident in getting a licence from the FSA,” adding he had confirmed Monex had “already finished investing for cyber security and internal control.”

Coincheck has continued to function since the Monex takeover, demonstrating stringent adherence to regulatory demands since the platform lost $534 mln in a hack in January –– the largest hack the industry has seen thus far.

In May, officials removed four anonymity-focused altcoins from Coincheck’s order book, while also first announcing plans to expand into the U.S. market.

“Japan may seem like it’s one step ahead in crypto, but in terms of deciding what’s a security or a token and attracting institutional investors, the U.S. and Europe are moving ahead,” Matsumoto told Bloomberg at the time.

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Canada’s Coinsquare Exchange To Make Foray Into Asia

Coinsquare, a premier Canadian cryptocurrency exchange, has just announced plans to make expansions into Japan, with this move being made in collaboration with a global blockchain firm.

To make this foray into the Asian market a success, Coinsquare is joining hands with DLTa21 in a strategic partnership, which will see the two engage in collaborative efforts to ensure all goes well. For the uninitiated, DLTa21 is a “global blockchain investment bank” that has offices around the world, including in Canada and Japan.

DLTa21’s expertise in the Japanese and worldwide markets will aid Coinsquare’s aspirations to open a centralized cryptocurrency exchange based in Japan. The Canadian exchange will offer infrastructure for the proposed exchange, while DLTa21 will work with Japanese regulators to ensure the new exchange will be legitimate in the eyes of the law.

Cole Diamond, CEO of Coinsquare, gave a statement complimenting the announcement. Diamond said:

Working with a world-leading investment firm like DLTA 21 to bring a safe, secure, easy digital currency buying and trading experience to Japan is a thrilling next step in Coinsquare’s mission.

Japanese Regulatory Worries

Japan has long been held as a Bitcoin ‘capital’ if you will, hosting many great cryptocurrency experts, innovators and most importantly, investors. However, due to exchange security breaches, like the Mt.Gox and CoinCheck hacks, lawmakers have begun lay heavy hands on the exchanges based on Japan. 

The Japanese Financial Services Agency (FSA) recently announced a series of rules, namely the ban of privacy-based cryptocurrencies trading, with this rule affecting the Monero, ZCash, and Dash cryptocurrencies.

The FSA also imposed new KYC/AML requirements and a mandatory need for cold wallet solutions, ensuring that all consumer funds are kept in control of an exchange. The latter rule was deemed necessary after the Tokyo-based CoinCheck exchange lost over $500 million in NEM tokens due to wallet mismanagement. It was revealed that CoinCheck was using internet-accesible hot wallets, allowing for malicious actors to remotely access the over $500 million in funds.

Coinsquare’s Japanese exchange will be suspect to the regulatory requirements as well, as DLTa21 will be working around the clock to receive regulatory approval for the Coinsquare/DLTa21 exchange. Despite harsh regulation, Coinsquare’s CEO expects for this move into Japan to be a sucess, adding that “Japan is a unique market and we’re looking forward to offering our platform’s capabilities to the Japanese market.”

Coinsquare To Go Public With September IPO

This expansion plan comes amidst Coinsquare’s efforts to take the company to a public stage, applying to offer its shares on Canada’s foremost stock exchange. However, Coinsquare noted that it plans to hold an initial public offering (IPO) prior to the Toronto Stock Exchange listing, hoping to raise upwards of $120 million in funds.

The firm pointed out that the capital raised through the IPO and sale of shares would be used to further expansion into new markets, as Diamond pointed out that the U.S. and U.K. markets are currently on Coinsquare’s radar.

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Japan’s Exchanges Regulatory Turning Point: How and Why Authorities Wrested Control

On March 8, 2016, Japan announced Bitcoin as a legal form of payment; its adoption was flourishing and only positive things could be said about the digital currency as the digitally inclined population embraced cryptocurrencies. Japan was a leader in Bitcoin and cryptocurrency innovation and adoption.

From ‘Miss Bitcoin’ to the slew of businesses that the island nation received after China’s ban on cryptocurrencies, Japan was becoming a super power of digital currency and happily taken the mantle, headlong.

Bitcoin businesses were booming in Japan — especially exchanges — but there came a turning point. Japan’s boom had been down somewhat to its hands-off approach to regulation, waiting to see how the rest of the world handled this tricky business. That was until a second major Tokyo hack.

Mt. Gox was, by now, mostly put away to the annals of history, but the lessons were not learnt when, on January 26, it was revealed that Tokyo-based exchange Coincheck had been robbed of 523 million NEM coins, worth approximately $534 mln.

This prompted Japanese authorities to finally step in and begin a path of strong and rigid regulation on cryptocurrency exchanges across the nation. It has seen sweeping changes affect the face of Japanese exchanges, with many being called out for poor management while others have banded together to form a self-regulatory board to try help clean up the space.

Coincheck turning point

It could be understandable why Japanese authorities decided that enough was enough after they picked up a second unwanted record  — holding the two biggest cryptocurrency exchange hacks in history, in just one town, does not look good for a government.

It led to the Financial Services Agency (FSA) getting their hands dirty and beginning to look into how these exchanges were being run. They, of course, began with Coincheck and quickly discovered how badly things were being run.

The FSA moved on 15 exchanges that were currently awaiting registration and also ordered all crypto exchanges in Japan to submit a risk management system report in the wake of the hack. It was clear that the hands-off approach was over and that the FSA and regulators were looking at the exchanges to explain just exactly how they had been running things.

In their findings, the FSA disclosed some damming issues they found with an exchange — which they kept anonymous.

“The company does not properly evaluate in the virtual currency space, as a result, an appropriate internal control system has not been established”. They went on to list a number of other major faults:

  • Regarding the in-house issued virtual currency, price formation was done by matching the company’s own account and the individual sales of the president.
  • The representative of the company temporarily diverted the money deposited from the user, in order to devote it to paying the expenses of the company.
  • The 100% shareholder of the company was privatizing the virtual currency (Bitcoin) deposited from users.
  • Despite the frequent occurrence of system failure cases while the business is rapidly expanding, it does not analyze the root causes sufficiently and does not take appropriate measures to prevent recurrence.
  • In trading a large number of virtual currencies over several times, the company does not make confirmation at the time of transaction and judgment on necessity of notification of suspicious transactions.
  • The company has not prepared a system to verify transactions at time of trading, and training for staff has not yet been done.
  • There is no one who fully understands the content requested by the authorities for improvement.”

This led to the FSA dishing out penalties — as well as orders — for the companies to stop operating. But, some companies didn’t let it get that far, as they decided to shut up shop before the new regulatory expectations became too much to bear.

Taking matters into their hands

This turning point of the Coincheck hack, and the FSA involvement, sparked some of the bigger and more established exchanges to band together. There were two ways they could have taken this intrusion by the government, but they decided to try and side with them to help.

A self-regulatory body was formed by 16 registered exchanges whose aim is to work together to produce industry-wide investor safety standards, including the creation of guidelines for Initial Coin Offerings. So, created in April, the Japan Virtual Currency Exchange Association (JVCEA) has been trying to clean up the crypto space going forward, while the FSA continues to sweep up the rubbish remaining, having just recently dished out five more improvement notices to exchanges.

The JVCEA’s own work also continues, as they are set to release more rules of their own organization this week in their continued bid to keep cleaning up the Japanese cryptocurrency space.

The official announcement of the regulatory guidelines, set for June 27th, will reportedly include a ban on insider trading and penalizing cryptocurrency exchange employees if they engage in “inappropriate” trading due to their firsthand knowledge.

All of these rules seem to be in reaction to the findings of the FSA, taking aim mismanagement of funds and poor dealings by the staff of the exchanges. And it is interesting to note that the JVCEA is also cracking down on anonymity coins, such as Zcash and Monero — two coins that are not favored by the FSA.

Japan Virtual Currency Exchange Association feeling the sting

In an interesting turn of events, the JVCEA took a rather large body blow on June 25 when it lost two of its vice presidents. Yuzo Kano and Noriyuki Hirosue, the CEOs of bitFlyer and Bitbank respectively, vacated their posts at the top of the organization.

What was the reason for their decision? Their own cryptocurrency exchanges had been served with business improvement letters from the FSA. This move, from both the CEOs and the FSA, just indicates the seriousness of the crackdown on exchanges in the company.

Even as part of an organisation aimed at trying to improve the standard of exchanges, the likes of bitFlyer and BitBank were not immune to the FSA’s rigorous requests for betterment. Kano and Hirosue’s departure from the organization is still open for interpretation, but the feeling is that they have focused their attentions toward their core business.

The JVCEA meanwhile appeared unphased by the news, with a statement promising it would continue on its mission.

“We will continue to do our utmost to protect the interests of users and to promote the sound development of the virtual currency exchange industry, including the early establishment of voluntary regulation rules.”

Still building towards regulations

With all the work and effort that has been done by both the FSA and the JVCEA, there is yet to be any hard and fast regulation in place. Rather, a it is bringing them in line with the general financial practices expected from businesses.

However, there is now work being done by the FSA to see which direction the actual regulation should go, as a Crypto Study Group has been formed. Members of the study group will come from academic institutions, cryptocurrency exchanges as well as government agencies as observers.

According to Cointelegraph representatives who have attended meetings of such groups, there seems to be a divide in the group along two different ideals

The one side of the group is a product of the FSA’s inspection and the issues they have uncovered. They are concerned and are arguing for much more investor protection from the regulators. The other side appears to be more balanced. They are looking for innovation and regulation to work together and want to fix the problems without killing the entire ecosystem.

While the minutes of the first meeting have not been released, it was reported that the participants discussed — with respect to leveraged trading — the need for a margin requirement with a limit on maximum level of leverage and, with respect to ICOs, appropriate regulatory framework.

Rocky, but steady

Japan’s regulatory framework has now, because of the mishaps of Coincheck, been given a regulatory bedrock that will no doubt be important globally. The FSA has had to come out hard and put money exchanges to the sword, prompting the formation of the JVCEA and helping address the poor state of Japanese exchanges.

A lot of the cryptocurrency regulation will happen within the framework of exchanges, and — by putting their current operating businesses through these strict and stringent laws — the FSA and the Japanese government appear to be hoping that they are setting the tone for how the entire space should be governed.

Currently, throughout the globe, there is an ongoing battle on regulations as how to balance the promotion of innovation and the security of crypto users from regulatory intervention. Japan now has a reason to be a lot more strict with its regulations, as it has suffered the consequences already with both Mt. Gox and Coincheck.

To this end, when its regulatory rules do start to roll out, it is going to be hard to argue with stricter and tighter controls by the government, as they can always count with the millions that were lost in those two major hacks alone.

If Mt. Gox showed Japan what is possible, Coincheck sparked them into action. They have hard and fast rules for exchanges now in place, but those rules could be the bedrock on which the regulations are built on. It may be strict, but it will also be secure.

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From Coincheck to Bithumb: 2018’s Largest Security Breaches So Far

On June 19, Bithumb, South Korea’s number one crypto exchange, was hacked. The attackers stole cryptocurrencies worth $30 million, making it one of the largest heists of the year so far. While the exchange has already promised to compensate its users, the damage has been done: yet again, it has become evident that even the biggest players cannot guarantee total safety.

Indeed, the crypto world hasn’t been the same since the Mt. Gox collapse. Still, it comes down to how these attacks are handled in the aftermath: while some go MIA or start diffusing the responsibility, others choose to rebuild their reputations step-by-step, steadily making amends with the community. Here’s how the largest hacks of 2018 so far have happened, and what their consequences have been.

Bithumb

Bithumb: “No damage” to the customers
When: June 2018
Hacker’s prize: $30 million worth of cryptocurrencies
Outcome: Drop in rating

On June 19, Bithumb, South Korea’s biggest crypto exchange, was hacked. Over 35 billion won (about $30 million) worth of cryptocurrencies was stolen. At the time of the attack, Bithumb was ranked as the sixth largest exchange by trade volumes globally but has since dropped to 10th place.

According to Cointelegraph Japan, the hackers hijacked Bithumb’s hot wallet. Coincidentally, the exchange started moving “all of asset[s]” to a cold wallet in order to upgrade its security system on June 16, days prior to the attack.

Once Bithumb’s team realized their service was being hacked, it halted all deposit and withdrawal services. In an official announcement made on June 21, the crypto exchange confirmed its intention of reimbursing the users affected of the theft. Moreover, Bithumb stated that their wallet system was undergoing “a total change” in order to prevent further attacks and claimed that there will be “no damage” to its customers as a consequence of the theft, emphasizing its strict separation of customer and company assets.

According to reports from local media, the country’s Ministry of Science and Technology has launched an investigation into the hack. Reportedly, the Korea Internet & Security Agency (KISA) also got involved in order to figure out how exactly the attack occurred, working closely with local police and other agencies. Allegedly, authorities have also sent officers to Bithumb’s offices in Seoul to collect data and records from the company’s computers.

The hijack occurred just weeks after Bithumb was cleared by the South Korean government, which found no evidence of wrongdoing at Bithumb after a three-month investigation, but ordered the exchange to pay 30 billion won (approximately $28 million) in taxes.

Bithumb has been hacked before. In July 2017, the personal data of 30,000 customers was stolen due to an employee’s computer becoming compromised, while some users reported losses as well.

Coinrail

Coinrail: Danger of FUD
When: June 2018
Hacker’s prize: 40 billion won (approximately $37.2 million)
Outcome: Mainstream media overreaction

When South Korean exchange Coinrail was hacked, the mainstream media reacted in full force. Bloomberg, the Wall Street Journal, Reuters and the Guardian all linked the cyber attack with the price drop of Bitcoin and altcoins — Bitcoin lost around 11 percent of its value at the time — albeit recognizing that Coinrail was a rather small operation, being the 99th largest crypto exchange at the time. Moreover, none of those articles mentioned another possible explanation of the price drop, such as U.S. regulators’ probe into price manipulation in the crypto market, which was happening at the same time. That, of course, outraged the community.

It was reported that Coinrail lost around 40 billion won ($37.2 million) worth of cryptocurrency, including 21 billion won worth of Pundi X and 14.9 billion won worth of Aston coins. As local news outlet Sedaily points out, Coinrail removed parts about reimbursement from its terms of service a week prior to the attack. However, the exchange reportedly explained the removal by saying that it was working with the government to revise the terms of the contract.

According to the exchange’s website, 70 percent of its assets have been transferred to cold storage, and “about 80 percent” of the stolen coins have been frozen or withdrawn in some way, as the exchange is under “system maintenance.” Coinrail plans to reopen around July 15.

Verge

Verge: Ignorance is bliss
When: April-May
Hacker’s prize: 35 million XVG (about $1.7 million)
Outcome: Damaged reputation

Privacy-focused cryptocurrency Verge (XVG) has been hacked twice — thrice, considering that its Twitter account was taken over in March, as well — in the past few months.

In the beginning of April, reports about Verge being hacked started to emerge. Apparently, the attackers exploited a bug that allowed the manipulation of block mining timestamps. Using the code’s flaw, they had the ability to create illegitimate coins out of nowhere, stealing 250,000 XVG as a result. Verge called the incident “a small hash attack” and claimed that funds were only exploitable for three hours. On Bitcointalk.org, a member of the Verge team wrote “we’re kinda glad this happened and that it wasn’t as bad as it could have been.” In response, the message board user OCMiner noticed that developers apparently ‘resolved’ it by accidentally launching a hard fork. XVG lost about 25 percent of its value in reaction to the news.

On May 21, Verge was hacked again, as its team tweeted that their mining pools were under a DDoS attack. This time, 35 million XVG (about $1.7 million) was stolen over a period of a few hours, and XVG went down by a little over 14 percent.

OCMiner, who called attention to the first security breach, pointed out Verge’s vulnerability on the message board again, stating that “since nothing really was done about the previous attacks (only a band-aid), the attackers now simply use two algos to fork the chain for their own use and are gaining millions.” XVG’s price is at $0.026131 as of press time, its lowest for the past three months, according to Coinmarketcap.

Coincheck

Coincheck: Compliance and transparency
When: January
Hacker’s prize: 532 million NEM coins
Outcome: Coincheck survived the hack and the FSA pressure, was bought

In January, the Tokyo-based exchange Coincheck was hacked. Coincheck had to freeze all operations after it lost 523 million NEM coins — worth approximately $534 million at the time — on January 26. The coins were lifted through several unauthorized transactions from a hot wallet (according to Coincheck representatives, the hackers managed to steal the private key for it) where NEM coins were being stored, enabling them to drain the funds. Later in the day, NEM Foundation president Lon Wong called it “the biggest theft in the history of the world.” Indeed, the Coincheck hack was larger than that of Mt. Gox by about $50 million in terms of stolen funds.

Soon after the security breach occurred, Coincheck held a press conference. There, the Coinbase team explained that NEM coins were indeed being held on a simple hot wallet rather than a much more secure multisig wallet, as the security setup differs between various coins on the exchange. They stressed that other cryptocurrencies on the platform were stored in multisig wallets and confirmed that the stolen funds belonged to customers. The Coincheck team also promised to refund their clients.

In March, a local news outlet — the Nikkei Asian Review — wrote that malware emails were sent to several members of Coincheck staff weeks before the attack, which might have opened the employee email system to allow the hackers to steal the private key.

In the aftermath of the attack, 10 crypto traders filed lawsuits in mid-February over Coincheck’s freezing of crypto withdrawals. 132 more crypto investors filed another lawsuit in early March, seeking around 228 million yen (around $2 million) in damages. Nevertheless, Coincheck made good on its promise, as in mid-March the exchange platform started to refund the affected customers and allowed the withdrawal and sale of certain cryptocurrencies.

During the process of handling the aftermath, Coincheck had shown full compliance with the FSA, Japanese regulatory body that oversees the crypto industry in the country. Soon after the cyberattack, the FSA conducted on-site inspections of 15 exchanges and sent business improvement orders to seven of these exchanges, including Coincheck. After the inspection, the exchange opted to drop three anonymity-based coins from its list.

In April, the traditional Japanese financial services provider Monex Group bought 100 percent of shares of Coincheck Inc, for 3.6 billion yen ($33.5 million). The new owner soon announced plans for international expansion. So, overall, Coincheck seems to have rebounded after the massive hit.

BitGrail

BitGrail: Let’s play the blame game (and get sued)
When: February
Hacker’s prize: 17 million XRB tokens
Outcome: Firms wallets seized through court

On February 8, Italian cryptocurrency exchange BitGrail claimed that $195 million worth of customers’ cryptocurrency in Nano (XRB, formerly known as Raiblocks) was stolen in what could be perhaps the shadiest hack on this list, as the blame is still being shifted between BitGrail founder Francesco Firano and the Nano development team.

Essentially, a day after BitGrail was ‘hacked,’ and 17 million XRB tokens were drained from the exchange’s wallets, Nano developers made an official comment showing that BitGrail’s owner and operator Francesco “The Bomber” Firano had asked for the coin’s ledger to be altered.

“[…] Firano informed us of missing funds from BitGrail’s wallet. An option suggested by Firano was to modify the ledger in order to cover his losses — which is not possible, nor is it a direction we would ever pursue,” Nano wrote in a Medium post.

The Nano team then published alleged evidence that some of the withdrawals Firano claimed were the result of a hack had occurred as early as October of 2017. Firano denied those findings, which are contestable because Nano does not record transaction dates directly to its blockchain. At one point, he implied that transactions were somehow removed and restored in a later date, which is technically unattainable due to the nature of blockchain.

In an interview with Cointelegraph, Firano also stated that it would be “impossible to refund the stolen amount” and argued that the timestamp technology of Nano and that the block explorer of the cryptocurrency is not reliable. The Nano blockchain network did a re-synchronization of its nodes, providing every block or transaction missing before January 19 with timestamps. This suggested that all transactions were, in fact, recorded accurately.

Nevertheless, BitGrail users still haven’t received a definitive answer as to what precisely lead to the incident, and they headed to the courtrooms. On April 5, a class action lawsuit was filed in the U.S. on behalf of investors. The Nano team supported them, stating that they would even help pay the lawyer bills of those who sought to battle BitGrail in court.

In March, after legal pressure was applied, BitGrail announced plans to refund their users, but only if those users stopped trying to sue the exchange. In a press release, BitGrail said that, “the use of the platform for the victims of the theft will be bound by the signature of a settlement agreement. The latter will be characterized by an expressed renouncement from the users to every type of legal action, and will have to be formalized through the compilation of a form.”

Thus, Bitgrail intended to pay back its users by creating a token, Bitgrail Shares (BGS). The customers who were affected by the heist were refunded 20 percent of their lost amount in XRB, with the remaining 80 percent supposed to be covered by BGS. Nonetheless, BitGrail once again claimed that they are not taking the responsibility for the hack, continuing to point fingers at Nano and its alleged protocol problems.

On June 15, the BitGrail case took another turn, as the BTC stored in the firm’s wallets were confiscated by Italian law authorities. The funds were removed following a court order by the Tribunal of Florence on June 5, but did not mention the current value of the seized assets. The court order was triggered by a petition filed by the victims of the BitGrail hack.

MyEtherWallet, BlackWallet and Binance

Smaller hacks: MyEtherWallet, BlackWallet and Binance

In January, a DNS hijack led to hackers stealing $400,000 worth of Stellar Lumen (XLM) coins from wallets of Blackwallet.co. The attackers took over the service’s hosting server and changed settings to send the coins to their address.

Similarly, over $150,000 worth of ETH was stolen in the DNS attack on crypto wallet MyEtherWallet (MEW) in April. The attack recalled the allegations of a DNS hack levelled at MEW in January by the developers of altcoin Ethereum Blue, radically denied at the time by MEW team, who called it “a stupid lie.”

On March 7, the users of Binance, the world’s largest crypto exchange by trading volume, were affected by a hack of third-party software. That resulted in unauthorized transactions being made from their accounts. However, as CEO of Binance Changpeng Zhao soon declared, all users’ funds were safe, and the exchange returned to operating normally. On March 11, Binance said it was offering $250,000 in Binance Coin (BNB) for the first person to supply the information that would result in the legal arrest of the attacker.

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Japan’s Finance Minister Wants to Change Crypto Taxation, Doubts Public Acceptance

Japan’s Minister of Finance thinks that it is doubtful the public would accept a change in the taxation of cryptocurrency transactions, Cointelegraph Japan reports today, June 25.

During today’s Upper House Budget Committee meeting, Taro Aso — also Japan’s Deputy Prime Minister — said that crypto transactions should be taxed as a “separate self-assessment taxation” rather than their present classification as “miscellaneous income,” while expressing doubt over the public’s reaction due to “tax fairness.”

The current tax rate for crypto transactions has a maximum of 55 percent, and changing its category would bring it to a 20 percent flat tax similar to stocks or forex trades.

During the same meeting, Aso noted that the position of cryptocurrency in the international financial sector is uncertain. He also spoke of the importance of the development of blockchain technology, but added that supporting the technology can be controversial, given that it underlies cryptocurrencies.

Japan’s Financial Services Agency (FSA) has been active last week,  issuing business improvement notices to crypto exchanges as part of their ongoing regulatory inspections following the $530 million hack of Japanese crypto exchange Coincheck in January.

Today, the two vice-presidents of Japan’s self-regulatory cryptocurrency exchange body resigned after both of their respective exchanges received FSA business improvement notices last week.

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Japan: Financial Watchdog to Issue Business Improvement Notices to 5 Crypto Exchanges

Japan’s Financial Services Agency (FSA) will be issuing business improvement notices to five registered cryptocurrency exchanges by the end of this week, Cointelegraph Japan reports Tuesday, June 19.

According to the FSA inspections, crypto exchanges BitFlyer, Quoine, Bitbank, BITPoint Japan, and BtcBox do not have the proper internal management systems, including their measures to prevent money laundering. BitFlyer, Quoine and Bitbank are some of the largest crypto exchanges both in the country and in the world, currently sitting at 27th, 18th and 20th places by trade volume, according to Coinmarketcap data.

When asked about the business improvement notices, BITPoint Japan told Cointelegraph Japan that there is “no such fact at the present time,” BitFlyer said they are “not in a position to comment,” Bitbank and Quoine said they could not answer, and BtcBox did not respond to a request for comment by press time.

Following the January $532 million hack of NEM from Japanese crypto exchange Coincheck, the FSA had begun inspections of crypto exchanges, issuing multiple business improvement notices and halting the operations of several exchanges as well.

Since April 2017, all crypto exchanges in Japan must be registered with an FSA license to operate. At the beginning of June, the FSA rejected a crypto exchange license application for the first time, citing concerns that the exchange — whose services had already been suspended twice this spring — didn’t provide adequate customer identity verification in the case of suspicious transactions.

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Japan’s Self-Regulatory Crypto Exchange Body to Release Voluntary Rules, Report Says

Japan’s Virtual Currency Exchange Association (JVCEA) will reportedly be releasing new voluntary rules next week, Cointelegraph Japan reports today, June 18.

The official announcement of the regulatory guidelines, set for June 27th, will reportedly include a ban on insider trading, penalizing cryptocurrency exchange employees if they engage in “inappropriate” trading due to their firsthand knowledge.

In order to conform to anti-money laundering (AML) regulations, the voluntary regulation proposal will also prohibit the trading of anonymity-oriented cryptocurrencies, such as Monero and Zcash, on exchanges.

Formed at the end of April following the $530 mln NEM hack of Japanese crypto exchange Coincheck, the JVCEA is a self-regulatory body that combined the two crypto entities already in existence — the Japan Blockchain Association (JBA) and the Japan Cryptocurrency Business Association (JCBA).

The organization, which is made up of Japan’s 16 licensed crypto exchanges, describes its operations as inspecting the security of crypto exchanges in Japan, as well as more specific tasks like assessing tokens issued in Initial Coin Offerings (ICO).

In April, Korea’s self-regulatory cryptocurrency association released its own set of guidelines, which included managing clients’ coins separately from their own supply, holding a minimum equity of 2 bln won ($1.8 mln), and releasing regular audit and finance reports.

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Hacked Crypto Exchange Coincheck Confirms Removal of Four Anonymity-Focused Altcoins

Recently hacked Japanese crypto exchange Coincheck will end trading for four privacy-oriented cryptocurrencies, Monero (XMR), Zcash (ZEC), Dash (DASH), and Augur (REP), Cointelegraph Japan reported May 18.

Following reports from back in March, the exchange has now officially confirmed the removal of the four anonymity-focused coins will come into effect June 18. According to Coincheck’s blog, the exchange will remove the four cryptocurrencies to comply with counter-terrorist financing (CFT) and anti-money laundering (AML) measures recently issued by Japan’s financial regulator, the Financial Services Agency (FSA).

The FSA has been especially active in regulating domestic crypto exchanges, specifically around customer protection, since Coincheck lost $532 mln in NEM in  a major hack in January of this year.

As part of its efforts, the FSA has stated that local, officially registered exchanges will face restrictions on the trading of privacy-focused altcoins, since they are more difficult to trace than cryptocurrencies like Bitcoin (BTC).

As Friday’s official statement from the exchange says, the targeted cryptocurrencies will be sold at market price and converted to Japanese yen.

Earlier this week, Monex Inc, the company that recently acquired Coincheck, revealed plans to expand the exchange to the U.S., claiming that the U.S. and Europe are more advanced than Japan in terms of regulatory clarity and “attracting institutional investors” to crypto.

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Post Hack Coincheck Reveals Plans To Expand To Us Market

Monex Inc, the company that recently acquired hacked Japanese crypto exchange Coincheck, has revealed plans to expand the exchange to the U.S. in an interview with Bloomberg today, May 18.

Monex CEO Oki Matsumoto said he expects Coincheck will receive an official license from Japanese authorities next month, but – without specifying a timeframe – he revealed the company now has its sights beyond Asia:

“Japan may seem like it’s one step ahead in crypto, but in terms of deciding what’s a security or a token and attracting institutional investors, the U.S. and Europe are moving ahead.”

Japan has long been at the vanguard of crypto adoption – the country was the first to recognize Bitcoin as a form of legal tender back in 2016 – but Matsumoto considers that the U.S. and Europe have now taken the edge in terms of crypto-specific regulatory momentum. He compared Japan’s hefty 55 percent levy tax on crypto with France’s recent initiative to tax crypto at a favorable capital gains rate of 19 percent, telling Bloomberg that:

“At [Japan’s] level, it’s hard to even think of crypto as something you’d put in your portfolio. That means it’ll just remain a plaything for speculators.”

More crucially still, the CEO argued that U.S. federal regulators now wield the biggest influence on deciding the future status of crypto in the world economy, referring to the ongoing debate as to whether digital assets should be regulated as securities or commodities. An eventual decision would provide much-needed clarity for the emerging industry, and ultimately foster growth and institutional investor confidence, he told Bloomberg.

Monex’s decision to target overseas markets is the latest in a series of upheavals in Coincheck’s checkered history since its unprecedented $532 mln hack in Jan. 2018. Coincheck was subsequently acquired by Monex in April, with the latter’s shares surging 98 percent since the acquisition, according to Bloomberg.

Recent figures released by Monex showed that notwithstanding the mammoth post-hack writedown that Coincheck issued as a refund to affected customers, the exchange still closed the fiscal year in the green, netting ¥6.3 bln (about $56.7 mln) revenue on sales of ¥62.6 bln.

Earlier this month, Japan’s Financial Services Agency (FSA), laid out yet further stipulations for the already stringent regulatory measures that have been imposed on the country’s crypto exchanges. An FSA source nonetheless judged that the crypto regulatory process in Japan has been unfolding “without the necessary know-how – we been feeling our way through the dark.”