Compensation to be paid to exchange NEM digital currency holders.
The Japan-based cryptocurrency exchange Coincheck Inc has announced that it has started to pay back the money it lost after the exchange was hacked and a large amount of digital currency was stolen from investors.
The announcement comes as the company is stilling picking up the pieces after the Japanese government publicly reprimanded them for insufficient and lax standards. The theft in January has also raised questions of the government itself and just how much oversight Japan has over the digital currency exchanges.
Not just Coincheck
Coincheck isn’t alone in being given a metaphorical dressing down. Following an investigation by Financial Services Agency (FSA), Japan’s financial regulator ordered six other exchanges to make serious improvements in in their business model, from increased security, Disaster Recovery, Risk Management, and preventing the criminal use of cryptocurrencies.
Coincheck’s CEO, Koichiro Wada, recently announced that it would start to repay affected customers in response to a multitude of class action lawsuits.
First to regulate
Late last year, Japan became the first country to formally institute a form of regulation over cryptocurrency exchanges based in Japan, in order to try and curtail illegal uses of cryptocurrencies and protect customers.
Last month, a phalanx of Japanese Government-registered cryptocurrency exchanges announced plans to set up their own regulator in the region, to promote trust and snuff out malpractice.
16 digital exchanges
As initially reported by news agency Reuters, the self-regulating committee will consist of 16 individual digital exchanges, but will be open to other crypto exchanges who have registered with the Japanese government, including those who intend to apply in the future, and those whose applications to register are still pending.
Self-regulation has now become an urgent imperative for Japan’s exchanges. Only last month, an error at one of the exchanges allowed investors to purchase bitcoins for free, albeit very briefly. While no-one was ultimately able to gain from the mistake, it shone another unwanted spotlight on the industry.
What is NEM?
NEM is the the world’s tenth-biggest cryptocurrency by market capitalization, and in a sign of just how much of a major hub of digital currency Japan is, nearly one-third of global bitcoin transactions were denominated in yen last month, according to the specialist website jpbitcoin.com. CoinCheck also often refers to itself as “the leading bitcoin and cryptocurrency exchange in Asia”.
Japan’s love affair with Crypto
Cryptocurrency in Japan is far more accepted than it is in other markets, such as the USA and Europe. As many as 10,000 businesses accept payment in Bitcoin, and last year, the country started to require that cryptocurrency exchange operators registered with the government.