18.05.2021

BitMEX Restricts Access to Japanese Residents, Citing Changes to Local Law

The move follows a cabinet order, released April 3, with amendments made to the Japan Financial Instruments and Exchange Act and Japan Payment Services Act effective as of May 1, 2020. The amended provisions to the operation of crypto exchanges include changes to advertising rules, user information and other such measures designed to “protect users,” the cabinet briefing said.

Japan has amended the way cryptocurrencies are regulated within the country, prompting BitMEX to begin restricting access to local residents, the exchange announced last week.

As a result, BitMEX announced it would be restricting access to local residents as of April 30, meaning newly registered Japanese users will not be able to execute a trade while any existing Japanese users will not be able to place orders or open new positions.

Positions currently still open as amendments to the Services Act come into effect will continue as normal until expiration, in accordance with the terms of a given contract.

“We support the efforts of regulators to help establish standards for cryptocurrency products,” BitMEX stated in its announcement. “We will continue to work with the Japanese regulatory authorities to support their aims for the Japan market and will keep our Japan users updated.”

BitMEX has previously restricted users from other regions in the past, including Hong Kong and Bermuda, the Seychelles, Quebec in Canada, Cuba, Crimea and Sevastopol as well as Iran, Syria, North Korea and Sudan.

In 2019, BitMEX ran afoul with the U.S. Commodity Futures Trading Commission (CFTC) after the exchange was accused of allowing U.S. traders to use its platform via a virtual private network (VPN). U.S. citizens are currently banned from using the spot and derivatives cryptocurrency trading platform.

Bittrex Adopts Chainalysis KYT Software to Flag Suspicious Activity

Bittrex, the U.S. crypto exchange, has adopted blockchain compliance firm Chainalysis’ real-time monitoring software for transactions to flag suspicious activity across many of its leading coins, Bittrex executives told CoinDesk.

Bitcoin, ETH, bitcoin cash, litecoin, dai, gemini, among other cryptocurrencies traded on Bittrex are covered by the new software, known as Chainalysis KYT (Know Your Transaction).

Bittrex’s adoption of Chainalysis KYT comes as governments and regulators around the world are increasing their oversight of crypto exchanges. In June, the Financial Action Task Force (FATF) gave the exchanges of its 37 member countries 12 months to begin tracking complete customer details on every transaction handled.

Though Bittrex was already in compliance with similar U.S. regulations, Chief Compliance and Ethics Officer John Roth said Chainalysis KYT goes further. Its built-in knowledge base of suspicious addresses – “dark net sites, child exploitation sites” – puts Bittrex a step ahead, he said.

“Having real-time information coming in from which we can make risk decisions is really an amazing step forward, and frankly one that’s not available to traditional financial institutions”, Roth said.

Jonathan Levin, Chainalysis’ chief security officer, said KYT automates much of Bittrex’s review process.

“The key to supporting a large exchange like Bittrex is building features that enable them to automate their compliance process, prioritize their workflow, and customize their alerts to speed up how fast they can do due diligence”, Levin said.

Automation helps high-volume exchanges retain compliance “sustainability” – the capacity to identify a handful of suspicious transactions among millions of otherwise banal crypto trades.

The software flags the most likely criminal transactions, but a Bittrex-employed compliance analyst still needs to determine if the threat is valid and then file a suspicious activity report with regulators.

Bittrex ethics chief Roth said the new software is a response to the crypto space’s development and maturation as financial institutions explore exchange-based trades.

“They need to be assured that we are doing things the right way.”

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