BitFlyer, the largest cryptocurrency exchanges in Japan, has denied reports concerning the identity verification process in its platform. BitFlyer is among the four exchanges granted Bitlicense by New York State Department of Financial Services (NYPFS), along with Coinbase, Circle and Ripple.
Last week, a Nikkei report claimed that BitFlyer had made it easy for customers to start trading after submitting copies of their identity cards. According to the report, users were able to trade on the Bitflyer platform after 24 hours of opening an account. This seemed to attract many individuals, as they did not have to wait for about 3 weeks to start using their accounts.
On its website, BitFlyer provides a list of documentation needed for the verification process. These include a passport, government-issued Identity Card for proof of identity and credit card statement, utility bills, or government issued documents for proof of address. This, however, was not being followed, according to the report.
Based on Nikkei’s report, Japan’s Financial Service Agency (FSA) raised concerns about BitFlyer’s verification process. The law in Japan requires customers to email all verification documents to the exchange involved as part of Know-Your-Customer (KYC) requirements. FSA believes that criminals from money laundering and terrorism-related activities could use the platform to support their activities.
Bityflyer denied the reports in a statement: “We provide services only when we can confirm the agreement of the materials…if there is an error or inadequacy, service provision will not start. Also, in the event that the address is found unknown, the sale and purchase transaction is limited immediately.”
The Japanese cryptocurrency exchange also stated that it is fully compliant with the set regulations, noting that it is working with FSA to help strengthen their verification systems.
After last week’s reports, Bitflyer said it would be making new changes to strengthen the verification process on its platform. In the announcement, traders will not be able to make cryptocurrency deposit or fiat withdrawals without having completed the verification process. These changes will be effective starting from April 26. Users will also need to get a postal letter from BitFlyer as part of the identity verification process. In their statement, the changes will also affect clients that use bitcoin to pay for goods using their platform.
This year, FSA has undertaken exercises to make sure all the exchanges comply to set regulations. From the 16 exchanges investigated by FSA, only GMO Coin and Tech Bureau have received business improvement orders. Last week, FSA ordered Blue Dream, a trading platform In Japan to stop its operations until June 10. The platform was still in the process of registration before the suspension.
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