Japan Responds to DMM Bitcoin Loss with Mandatory Reserve Rules
In a direct response to the devastating $312 million hack of DMM Bitcoin, Japan’s Financial Services Agency (FSA) is enacting a tougher regulatory regime for the crypto sector. The centerpiece of this effort is a new rule legally obligating exchanges to establish liability reserves.
According to Nikkei Asia, the FSA will submit a bill to parliament next year mandating that exchanges hold capital to cover potential losses from hacks and exploits.
This addresses a critical gap in the current framework, which focuses on cold wallet storage but does not require financial reserves for compensation.
The move is part of a broader regulatory sweep that also includes bringing third-party custodians and trading partners under official oversight, aiming to prevent a repeat of the DMM incident, which was traced back to a vulnerability at an outsourced software provider.
