Japanese regulators initiate the development of a security system for crypto exchanges

Japanese regulators have become more active after a hacker attack and theft of NEM cryptocurrency worth 58 billion yen ($534 million) from the Japanese cryptocurrency exchange Coincheck. The Japanese Financial Services Agency (FSA) required Coincheck to provide a report on the system failures that led to the theft, prepare an effective plan to manage risks and improve the security system. In addition, the company must identify those responsible for the consequences of this incident.

According to experts, the regulator may also initiate a review of other cryptocurrency exchanges and raise the selection standards for their registration.

Coincheck director, Yusuke Otsuka, said that the company will reimburse losses in yen to all of its 260,000 user-owners of NEM, although the date of such reimbursement has not yet been set and When NEM transactions that were suspended on the exchange will resume is unknown. The company is working to resolve this issue and does not lose hope of returning the stolen cryptocurrency. 

Thanks to blockchain technology, which allows cross-chain monitoring, it is known that the extracted cryptocurrency was not converted into cash or other types of cryptocurrency. Theoretically, the online address where the stolen cryptocurrency is stored can be determined, although the identity and location of the owner of this address cannot be established.

Unauthorized access to the Coincheck system and the theft of almost all NEM deposits is the largest theft of cryptocurrency since 2014, when from the Tokyo Mt. Gox, bitcoins worth 47 billion yen have disappeared.

Japan uses a fairly flexible approach to regulating the cryptocurrency sector. The number of cryptocurrencies is growing and the regulator simply cannot keep up with them. In this regard, the FSA has called on two trade groups in the cryptocurrency sector, bitFlyer and the Japan Cryptocurrency Business Association, to join together as a self-regulatory body to develop common rules for investor protection, such as managing client assets separately from the capital of exchanges. 

Japanese virtual money stocks did not falter as the price of bitcoin remained stable after the Coincheck attack. It is now $11,500. 

The price of NEM before the attack was about $0.95, after the attack it dropped to $0.8 and then returned to around $1.

According to https://asia.nikkei.com