Japan crypto group VPs depart on heels of crypto exchange compliance orders

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The Japan Virtual Currency Exchange Association (JVCEA) was created by the cryptocurrency industry for the crypto industry in an effort to shore up confidence in exchanges. A week ago, it announced the first set of guidelines on best practices for the industry, scheduled to be released on Wednesday (June 27). A few days later, on June 22, the country’s Financial Services Agency (FSA) issued business improvement orders to several exchanges and now two executives from the member exchanges have stepped down from their vice president posts in the organization.

BitFlyer CEO Yuzo Kano and Bit Bank CEO Noriyuki Hirosue tendered their resignations after both exchanges received the orders. A total of six exchanges have been targeted by the FSA recently for lax policies related to anti-money laundering (AML) and Know Your Customer (KYC) requirements.

A notice on the JVCEA website acknowledged the resignations, but did not provide additional details. The notice went on to say that it would continue to work to protect the interest of users while promoting a sound development of the cryptocurrency exchange industry.

The FSA submitted a sizeable list of 11 improvements needed at bitFlyer that includes “an effective management system […] to ensure proper and reliable operation of the business, as well as countermeasures against money laundering and terrorist financing.”

Bit Bank was admonished for “…not having effective internal control system related to laundering and terrorism financing measures [and] outsourcing management, etc. was not established.” The FSA also noted that it had not established an effective management system “to ensure proper and reliable operation of the business, separateness management of user property [and] money.”

No word has yet been given on who might replace the two executives or whether the organization’s future plans could be in jeopardy.

The JVCEA was created in April in response to the hack of the Coincheck exchange that resulted in a loss of $530 million worth of NEM. It is a self-regulatory entity that merged two separate bodies, the Japan Cryptocurrency Business Association and the Japan Blockchain Association. It is comprised of 16 licensed exchanges and, among other responsibilities, inspects exchange securities in the country and assesses cryptocurrencies.