The Japan Virtual Currency Exchange Association (JVCEA), a voluntary self-regulatory organization of cryptocurrency exchanges and trading platforms, is considering ways to protect customer assets in the wake of the most recent hack attack, Japan Times reports.
As a rule, cryptocurrency exchanges store the large portion of customers’ assets offline for security reasons, but they have to keep some coins online to make them easily available for transactions. JVCEA plans to limit the number of customers’ assets kept and managed by exchanges online to 10-20% of the total amount of deposits. The new rules are supposed to protect customers’ money in case of hack attacks.
The tightening was prompted by the recent hacking episode with Japanese cryptocurrency operator Zaif owned by Osaka-based Tech Bureau startup. Thieves ran away with 7 billion yen (about $61 million) worth of cryptocurrency. About 4.5 billion yen ($39 million) of the stolen money belonged to Zaif’s customers. Industry experts believe that the company might have kept a too large a portion of digital assets online, which makes it easy game for hackers.
Earlier this year, the Japanese major exchange Coincheck lost customer assets to the tune of 58 billion yen (nearly $600 million) in the digital currency NEM, which was also stored and managed online.
JVCEA was established in April 2018 to restore trust in the country’s cryptocurrency industry following the Coincheck heist that cost the company over $600 million in NEM cryptocurrency. In August, the self-regulatory group applied for FSA certification, promising to help the government develop legislation for the cryptocurrency industry. Once the approval is received, JVCEA will enforce the now self-imposed voluntary rules.
Currently, the industry group includes 16 operators registered with the Financial Services Authority of Japan (FSA).