Business

Japanese cryptocurrency industry group plans to tighten rules on asset management after thefts

JIJI

A group of cryptocurrency exchange operators plans to tighten self-regulatory measures it follows on the management of customer assets in the wake of another hacking incident in early September, informed sources said Saturday.

The Japan Virtual Currency Exchange Association will set a ceiling on the amount of digital currencies managed online, according to the sources. The ceiling is likely to be around 10 to 20 percent of customer deposits, they said.

The industry group will shortly revise the self-imposed rules, drawn up in July, and implement them once it is certified by the Financial Services Agency according to the payment services law.

In the recent hacking case, about ¥7 billion worth of cryptocurrencies were stolen from an exchange run by Tech Bureau Corp., an Osaka-based startup.

The stolen funds were managed online, with about ¥4.5 billion belonging to customers.

The incident followed a similar case involving Coincheck, a major exchange, in January, in which ¥58 billion in customer assets in the digital currency NEM were stolen. The affected assets were also managed online.

Cryptocurrency exchanges usually keep large portions of digital currencies owned by customers offline for security reasons, but some portions are connected to the Internet so that they are available for transactions.

Industry sources suspect that Tech Bureau may have exposed too large a portion of the cryptocurrencies to the Internet.