Japan’s Financial Services Agency will reportedly introduce new rules regarding cold wallets for storing cryptocurrencies.
Citing a source familiar with the matter, Reuters reports that the country’s financial regulator will reportedly require cryptocurrency exchanges to strengthen internal supervision of cold wallets — devices for storing digital currency which are not connected to the Internet.
By implementing the new regulation, the FSA purportedly addresses the difficulties of ensuring the security of digital currencies and other risks for the country since it intends to boost the fintech industry to stimulate economic growth.
Although cold wallets are not connected to the Internet and, therefore, provide better security to digital assets, the FSA suggests there could be risks of internal theft. According to the source, a number of exchanges do not have a policy where the person responsible for the storage would be regularly rotated out.
Earlier this month, the FSA heard arguments for no longer classifying bitcoin (BTC) as a currency. During a plenary session at the 41st General Assembly of the Financial Council and the 29th Financial Division Meeting, Professor Iwashita Goto of Kyoto University argued that bitcoin had become something beyond a means of transacting due to its borderless qualities, which have led it to appear throughout the world in its ten-year history.
In March, the FSA approved the second cryptocurrency exchange to begin operations under new regulations. The FSA began issuing licenses to new cryptocurrency exchanges looking to serve the Japanese market. The licensing scheme, which has a long waiting list, was in part a reaction to the events of the past two years, notably local exchange Coincheck’s half-billion-dollar hack in January 2018.