A conglomerate of cryptocurrency exchange platforms in Japan has decided to set a limit on the online deposits of their users. The measure comes after the hacking of an exchange platform in mid-September. The exchanges that are part of Japan’s Virtual Currency Exchange Association have agreed to limit the amount of cryptos that are hot-stored.
Usually, cryptocurrency exchanges store their cryptocurrencies in two ways, either cold and hot. Cold storage refers to the funds that are stored in wallets that are disconnected from the Internet. Hot storage relates to those portfolios that have an active connection to the Internet, such as those usually used by crypto trading platforms.
With this measure, 80-90% of the funds that users deposit on Japanese exchange platforms will be stored cold.
The measure has been established after the security of the Japanese cryptocurrency exchange platforms has been compromised on multiple occasions. In fact, on September 14th, it was the turn of the Japanese platform Zaif to be cyber attacked. Hackers managed to steal $60 million in Bitcoin (BTC), Monacoin (MONA) and Bitcoin Cash (BCH).
Japanese cryptocurrency exchange platforms to limits clients’ deposits due to multiple cyber attacks
Tech Bureau Corp., the owner of the platform, decided to suspend all deposits and withdrawals on Zaif temporarily.
The Japan Virtual Currency Exchange Association was formed in April, and its primary objective is to improve the security system of the trading platforms across Japan. It was established following the theft of $530 million in NEM (XEM) from Coincheck in January of this year.
Similarly, Japanese authorities began to focus their attention on the country’s cryptocurrency exchange platforms, which included the raid on Coincheck’s offices.
The Association also seeks to establish self-regulatory measures to protect the interests of traders. The limit for online deposits is part of a series of statutes drafted in July. According to the Japan Times, these measures are awaiting approval from Japan’s Financial Services Agency (FSA) to take effect.