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Japan’s Financial Services Agency (FSA) is urging stricter internal audits and more in-depth examination of cryptocurrency exchanges in its 2024 monitoring report. This action is a part of larger initiatives to improve financial supervision nationwide, particularly in the quickly developing cryptocurrency industry.
The FSA emphasized the need for improved internal audits within the financial sector to keep up with global trends and ensure compliance. As part of this initiative, the agency announced plans to update its “Current Situation and Issues” guidelines. These updates will introduce stricter auditing standards, with a focus on maintaining high levels of oversight for crypto exchanges.
In an effort to engage industry leaders in these reforms, the FSA will host a “Roundtable on the Improvement of Internal Audits at Financial Institutions” in January 2025. The roundtable will feature representatives from various financial sectors, including banks and the Japan Cryptocurrency Exchange Association (JCEA), which counts major exchanges like bitFlyer and Coincheck among its members. Although specific details about the discussions are yet to be revealed, the roundtable will provide a platform to address the growing concerns about security and transparency in crypto trading.
This push for stronger auditing comes shortly after a significant cyberattack on Japanese crypto exchange DMM Bitcoin, which saw hackers siphon off $307 million in May. Investigations have linked the attack to North Korean cybercriminals, specifically the group known as TraderTraitor (also called Jade Sleet, UNC4899, and Slow Pisces). In a joint statement released on December 23, the Federal Bureau of Investigation (FBI) and Japan’s National Police Agency confirmed the involvement of North Korean actors in the hack.
These developments highlight the urgent need for tighter security measures in Japan’s cryptocurrency space. With hacking incidents on the rise, the FSA’s increased focus on internal audits aims to bolster the security infrastructure for exchanges, ensuring that they are better equipped to handle emerging threats.