Japanese self-regulatory group of cryptocurrency exchanges proposed to tighten customer asset management measures.
1 October 2018 –The self-regulatory Japan Virtual Currency Exchange Association (JVCEA) mulls to tighten their customer asset management measures. According to local media outlets, “informed sources” state that the JVCEA will set the limit at around 10 to 20 percent of customer deposits.
JVCEA Proposes Stricter Rules for Client Asset Management
JVCEA is a self-regulatory group of the largest licensed exchange operators in Japan. The organization has been established earlier this April. As of the moment, the organization is looking into strictening its rules by establishing a limit on the amount of digital currencies that can be managed online by any of the exchanges in Japan.
According to local media reports, JVCEA is in the process of revising its rules that were formulated in July. It is expected that the revised rules will be presented for certification to Japan’s Financial Services Agency (FSA).
Cryptocurrency exchanges usually store most of their customers’ cryptocurrency assets offline on cold storage wallets. Yet, a certain amount of cryptocurrency is usually stored on a hot wallet that has a connection to the Internet. This makes it vulnerable to possible hacker attacks. JVCEA’s new rules will restrict the share of digital assets that can be stored via this method by the organizations’ member exchanges.
What caused this move?
The call for stricter self-regulation appears after the recent hack of the Japanese cryptocurrency exchange Zaif. The exchange has lost 6.7 billion yen ($59.7 million) worth of cryptocurrencies that belonged to both the company and its customers.
Online reports claim that Zaif has been hacked on September 14th during a two-hour time frame. Some three days later, the cryptocurrency exchange has uncovered server problems and decided to look into them more closely. Following the internal investigation, on September 18th, the digital currency exchange confirmed that has suffered a hack attack. The exchange has promptly notified authorities about the security breach.
Last week, AtoZ Markets reported that the primary financial regulator of Japanese markets, the Financial Services Authority (FSA), is now reportedly looking into the situation that occurred earlier this month with the Zaif cryptocurrency exchange.
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