A cryptocurrency exchange in Japan was forced to shut down after the country’s financial watchdog on Thursday refused to authorize it to do business, the first such decision since regulations requiring approval were introduced last year.
The Financial Services Agency said it turned down Yokohama-based FSHO’s application to register as a handler of cryptocurrencies such as bitcoin after the company failed to implement sufficient safeguards against money laundering.
FSHO had already seen its operations suspended twice for offenses, including not asking customers for identification. The second suspension was lifted on Thursday, but company officials have said they will not resume business, according to the agency.
Registration became mandatory for cryptocurrency exchanges in Japan due to a revision of the payment services law that came into effect in April 2017.
So far, 16 companies have been registered as cryptocurrency exchanges. Exchanges that were doing business before the legal change, such as FSHO, have been given a grace period where they are allowed to operate while their registrations are pending.
But the government has put stricter standards on the industry following the theft of 58 billion yen (at the time about $ 540 million) worth of the cryptocurrency NEM from a Tokyo-based exchange that neglected to implement the proper security measures in January.
The exchange, Coincheck Inc., said Thursday it resumed trading of NEM for the first time since the heist, although transactions were limited to withdrawals and selling.
“With the help of outside experts, we have been able to confirm from a technological viewpoint the safety” of such transactions, read a statement on its website.
Deposits and buying of NEM continue to be restricted on the platform.