Japanese Cryptocurrency Exchange Tightened Rules For Asset Management Clients

The Japanese Virtual Currency Exchange Association (JVCEA), a voluntary self-regulatory organization of cryptocurrency exchanges and trading platforms, is considering ways to protect customers ‘ assets after the latest hacker attack.

As a rule, cryptocurrency exchanges keep most of the assets of customer offline for security reasons, but they have to keep some coins on the Internet to make them readily available for transactions. JVCEA plans to limit the amount of customer assets that are stored and managed in stock exchanges online, up to 10-20% of the total amount of deposits. The new rules are designed to protect customers ‘ money in case of hacker attacks.

The tightening was caused by a recent episode of hacking with the Japanese cryptocurrency operator Zaif. The thieves escaped with a cryptocurrency worth 7 billion yen (about 61 million dollars). About 4.5 billion yen ($39 million) of the stolen money belonged to Zaif customers. Industry experts believe the company may have retained too much of the digital assets on the Internet, making it easy for hackers.

Previous large-scale theft on the Japanese stock market occurred in January 2018. Then 58 billion yen (almost $ 600 million) in the digital currency NEM, was withdrawn from Coincheck, which was also online.

Cryptocurrency exchanges usually store most of the client’s assets in cold wallets, but a certain proportion of cryptocurrency funds are online so that they are available for transactions.