Japan's Financial Services Agency (FSA) has emphasized the importance of stronger internal audits across the financial sector, with a particular focus on cryptocurrency exchanges. This directive is part of its 2024 monitoring report, aimed at enhancing oversight and aligning with international auditing standards.
New Audit Guidelines and Roundtable Discussion
In a press release issued on December 26, the FSA announced plans to update its “Current Situation and Issues” guidelines. These updates will introduce new auditing measures designed to strengthen compliance and risk management in financial institutions, including crypto exchanges.
To further its efforts, the FSA will host a “Roundtable on the Improvement of Internal Audits at Financial Institutions” in late January 2025. Representatives from the banking sector and the Japan Cryptocurrency Exchange Association (JCEA)—which includes major players such as bitFlyer and Coincheck—are expected to participate. Additional details about the roundtable have not yet been disclosed.
Recent Cybersecurity Concerns
The FSA’s push for stronger internal audits follows a high-profile cybersecurity breach involving DMM Bitcoin, a Japanese cryptocurrency exchange. The attack, which occurred in May, resulted in $307 million in losses.
On December 23, Japan's National Police Agency and the Federal Bureau of Investigation (FBI) revealed that the hack was linked to North Korean cyber actors associated with the threat group TraderTraitor, also known by aliases such as Jade Sleet, UNC4899, and Slow Pisces.
Implications for the Crypto Sector
This latest initiative underscores Japan’s commitment to tightening security and improving operational standards in the rapidly evolving cryptocurrency space. By addressing internal audit weaknesses and collaborating with industry stakeholders, the FSA aims to bolster trust and resilience within the financial ecosystem, particularly in light of rising cyber threats.
As Japan continues to refine its regulatory framework, the enhanced guidelines and roundtable discussions are expected to play a pivotal role in shaping the future of crypto exchange oversight.