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FSHO First Cryptocurrency Exchange To Be Rejected By Japan’s Financial Services Agency

By

Tim

Prentiss

WriterETHNews.com

Following greater scrutiny of cryptocurrency exchanges since the beginning of the year, the FSA has now issued its first denial of registration to the exchange FSHO.

After almost $530 million worth of cryptocurrency was stolen from the exchange Coincheck in January, the Japanese Financial Services Agency started investigations into 32 cryptocurrency exchanges in what is perceived as the beginning of a regulatory crackdown. The results are now coming into view, as cryptocurrency exchange FSHO becomes the first exchange to be denied registration.

Following the investigation, which began in January, the FSA determined seven exchanges lacked sufficient oversight. Several exchanges were sent improvement orders, while at least two, FSHO and Eternal Link, were ordered to temporarily cease operations. FSHO's closure now appears permanent.

On March 8, the FSA announced its findings and ordered FSHO to cease operations for one month, during which time the company was to improve its procedures. When the FSA performed a second inspection, it determined the FSHO had not made the required improvements. After this second inspection, FSA again requested improvements and ordered FSHO to remain inoperative for two additional months. 

The follow-up inspection in May left the FSA still unsatisfied with FSHO's operation, leading to the recent announcement that it will not allow FSHO to resume business.

In its denial order, the FSA stated FSHO had not sufficiently implemented system risk identification and analysis mechanisms, and its procedures lack controls against money laundering and terrorist financing. 

The FSA qualifies its rejection, stating that it has "not confirmed whether or not they [FSHO] are antisocial forces with regard to their shareholders, officers and employees." 

However, the order also notes that attorneys and accountants who were delegated tasks related to developing improved procedures for FSHO had resigned prior to the most recent inspection.


Translations by Google.

Tim Prentiss

Tim Prentiss is a writer and editor for ETHNews. He has a master’s degree in journalism from the University of Nevada, Reno. He lives in Reno with his daughter. In his spare time he writes songs and disassembles perfectly good electronic devices.

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