Japan plans to use users’ credit information and social media IDs to monitor suspicious crypto trading activities and accounts. According to news reports, the Japan Credit Information Service, four credit reporting agencies and information security research firms will join forces to track suspicious account activity such as large deposits or withdrawals that have the potential to move markets from institutions and individual traders in cryptocurrency markets. The plan is expected to go into effect in the next few weeks. Trading on major cryptocurrency exchanges in Japan is restricted to Japanese citizens and resident foreigners.
By providing personal information of suspects, including credit scores and financial details, the government hopes to protect investors and improve the security of the cryptocurrency industry, Yizumi Nobuhiko, chairwoman of Japan Credit Information Service, told NHK, Japan’s state broadcaster. However, credit reporting agencies do not share personally identifiable information about individuals or organizations that are not suspected of criminal intent.
Clean up the crypto ecosystem
The latest move is part of Japan’s effort to clean up the cryptocurrency ecosystem. A massive theft at Coincheck, a cryptocurrency exchange, in February highlighted the lack of security measures at exchanges operating in the country. (See also: Coin Check.)
Recent reports also suggest that the agency thinks Yakuza, a Japanese crime syndicate, is using cryptocurrencies to launder money abroad. In response, the country’s Financial Services Authority (FSA) has begun scrutinizing crypto exchanges and ordering measures to improve their operations. Last week, the State Financial Services Authority (FSA) ordered cryptocurrency exchanges to step up their efforts to curb money laundering. (Also see: Bitcoin price falls after Japanese anti-money laundering regulation.)
Along with South Korea and the US, Japan has the highest cryptocurrency trading volume in the world. While the majority of traders are retail investors, the number of individuals with significant investments in cryptocurrencies has increased over the years. According to the latest statistics, at least 331 Japanese citizens reported income of 100 million yen ($910,000) from cryptocurrency trading in the last fiscal year.
Investing in Cryptocurrencies and Initial Coin Offerings (“ICOs”) is very risky and speculative, and this article is not a recommendation by Investopedia or the author to invest in Cryptocurrencies or ICOs. Because each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. At the time of writing this article, the author owns small amounts of Bitcoin and Litecoin.
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