Business 20 December 2018Dan Taylor
Hacked exchange Coincheck approved for Japanese crypto license: report
Japanese cryptocurrency exchange Coincheck has been awarded a crypto license by the Financial Services Agency (FSA), according to reports emerging in local media.
Quoting sources close to the process, Nikkei reported that an announcement was expected before the end of the year, confirming Coincheck’s return from the brink following a significant and high profile hack of the exchange in January.
Coincheck was the largest exchange in Japan at the time of the attack, which saw as much as $511 million worth of client money stolen from the firm. As a result of the theft, Coincheck stopped trading, froze client sell options, and resulted in tumultuous trading for crypto markets.
Coincheck was subsequently acquired by Monex Group in April, with the FSA reportedly satisfied that a number of internal processes had been sufficiently improved.
Following the hack, the FSA demanded a review of procedures at Coincheck on two separate occasions, suggesting that the firm was inadequately setup to handle issues around money laundering and consumer protection.
As a result of the theft, Coincheck ultimately repaid JPY48 billion ($429.78 million), down from the JPY56 billion ($501.42 million) stolen, to take account of cryptocurrency market value at the time.
The granting of approval is expected to spark the next wave of the approval process by the FSA, with some 200 companies reported to be waiting to secure licenses with the regulator.
The stringent approach taken by the regulator in the case of Coincheck is designed in part to reinforce the FSA’s expectations of strict compliance, including expecting firms to voluntarily halt trading if they fail to meet compliance standards.
The robust policy adopted by the FSA comes at a time of significant difficulties for exchanges, with some analysts suggesting low Bitcoin Core (BTC) prices could mean it would be difficult to find any exchange capable of covering the losses of a hack of the same scale today.
With the new license now secure at Coincheck, it remains to be seen now whether the embattled exchange can begin to rebuild its reputation, in spite of the current challenging market conditions.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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