As per reports by Reuters dated April 17, the Financial Services Agency – Japan is looking to offer new rules concerning cold wallets in order o store cryptocurrencies at cryptocurrency exchanges. According to
Reuters – citing one of the sources with some knowledge of the matter, the financial regulators in the land will essentially require crypto exchanges to bolster its local administration of Cold Wallets (devices essentially used to store digital currencies which are not connected to a server.)
FSA, by implementing the new regulations, is primarily addressing the complications of ensuring the safety and security of digital currencies along with various risks for the country as these new regulations intend to upgrade the entire fintech space with the intention of boosting and catalyzing economic growth.
Cold wallets in any way are not connected to the internet and hence provide better safety for digital assets. However, The Financial Services Agency Japan suggests that the cold wallets still posses the risk of internal thefts. As per the source, the majority of cryptocurrency exchanges do not have a protocol where the individual answerable for the storage would be routinely rotated out.
In the early days of this month, the FSA listened to debates for not classifying BTC (Bitcoin) as a currency. Professor Iwashita Goto of Kyoto University, at the time of a plenary session at the 41st General Assembly of the Financial Council and the 29th Financial Division Meeting debated that Bitcoin in this era has managed to become something more than a means of transacting majorly because of the qualities it posses, and this has given BTC global recognition in its decade long history.
In the month of March, the FSA authorized the second crypto exchange in order to start with its operations complying to new regulations. In order to serve the Japanese market better, the FSA began giving out licenses to new crypto exchanges. The licensing scheme has a very long list of exchanges waiting to be approved. The scheme was also majorly a result of the events that took place in the past couple of years, as an example – Coincheck’s half-billion-dollar hack in January last year.