By Takahiko Wada
TOKYO (Reuters) – Japan’s financial regulator will this week launch on-site checks of several cryptocurrency exchange operators potentially vulnerable to cyber-attacks, and may widen its inspections, a person with direct knowledge of the matter said on Thursday.
The Financial Services Agency (FSA) last Friday swooped on Coincheck Inc for surprise checks of its systems after the Tokyo-based operator had $530 million in digital money stolen by hackers.
The theft highlighted the vulnerabilities in trading an asset that policymakers are struggling to regulate. Japan last year became the first country to regulate exchanges at the national level.
After the late-January theft, the FSA said it would also investigate the other 31 cryptocurrency exchanges in Japan for security gaps. It ordered them to submit a report on their system risk management and storage of cryptocurrencies, and said it would follow up with on-site checks if it found vulnerabilities.
The FSA decided to inspect the exchanges after reviewing their reports, the source said, adding that the agency’s checks may widen as it analyses other reports.
The FSA declined to comment.
The agency has issued a business improvement order to Coincheck, while Tokyo police, as well as authorities in several countries, are investigating the heist.
Last year’s explosive rise in the value of digital coins and the flood of new retail investors drawn to the market have rattled global regulators nervous about a sector used largely for speculation. Officials have said cryptocurrencies are used by criminals to launder money.
(Reporting by Takahiko Wada and Chang-Ran Kim; writing by Thomas Wilson editing by Richard Pullin)