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

Bitcoin businesses were booming in Japan - especially exchanges - but there came a turning point.

This prompted Japanese authorities to finally step in and begin a path of strong and rigid regulation on cryptocurrency exchanges across the nation.

Coincheck turning pointIt 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 getting their hands dirty and beginning to look into how these exchanges 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.

Taking matters into their handsThis turning point of the Coincheck hack, and the FSA involvement, sparked some of the bigger and more established exchanges to band together.

Created in April, the Japan Virtual Currency Exchange Association 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.

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.

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.