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Updated January 29, The theft highlights the vulnerabilities in trading an asset that global policymakers are struggling to regulate and the broader risks for Japan as it aims to leverage the fintech financial technology industry to stimulate economic growth. Coincheck said on Sunday it would return about 90 per cent with internal funds, though it has yet to figure out how or when. The NEM coins were stored in a "hot wallet" connected to the internet instead of the more secure "cold wallet" which operates on platforms not directly connected to the internet, Coincheck said.

Last year, it became the first country to regulate exchanges at the national level — a move that won praise for boosting innovation and protecting consumers, and that contrasts sharply with crackdowns in South Korea and China. The FSA said it ordered Coincheck to submit a report on the hack and measures for preventing a recurrence by February 13, and that it will, if necessary, conduct on-site inspections of other cryptocurrency exchanges.

The regulator also said it had yet to confirm whether Coincheck had sufficient funds for the reimbursement. But the regulator does not have any rules banning the use of "hot wallets" by exchanges, nor does it set requirements on how much should be kept in "cold wallets," an FSA official said at a briefing. In response to FSA's order for improvements, Coincheck said in a statement it would promptly strengthen its customer protection and governance, and develop its risk management systems.

Japan started to require cryptocurrency exchange operators to register with the government only in April , allowing pre-existing operators such as Coincheck to continue offering services ahead of formal registration.

The FSA has registered 16 cryptocurrency exchanges so far, and another 16 are still awaiting clearance. Coincheck's application was made in September. If Coincheck screws up its crisis management, that could deal a blow to the current cryptocurrency fever.

Crypto-currency-related shares mostly rose in Tokyo, with GMO Internet, which offers cryptocurrency exchange services, gaining 5. Exchange operators in Tokyo said the Coincheck hack would likely cause concerns over security to grow among consumers, potentially pressuring the price of cryptocurrencies.

It added that the hacker had not moved any of the funds to any exchange or personal accounts but that it had no way to return the stolen funds to its owners. First posted January 29, If you have inside knowledge of a topic in the news, contact the ABC. ABC teams share the story behind the story and insights into the making of digital, TV and radio content.

Read about our editorial guiding principles and the enforceable standard our journalists follow. The AFL has endured an agonising debate about changes to the way the game is played. Yet it seems that the referee being sacrosanct and the integrity of players' heads have fallen to the wayside this week, writes Richard Hinds. Regional electorates are likely to benefit most from the first tranche of the Government's new income tax cuts.

By music and pop culture reporter Paul Donoughue. Jessica Mauboy and her co-writers found that, when you're trying to speak to so many different people, "it's nice to remember that love overcomes hate". The hacker has not moved any of the funds to any exchange or personal accounts. The Financial Services Agency orders improvements to operations at Tokyo-based Coincheck Coincheck says it will return about 90 per cent with internal funds The NEM coins were stored in a "hot wallet" instead of the more secure "cold wallet".

Coincheck apologised after the breach. Here's what would happen if the Bitcoin 'bubble' burst Analysts are sceptical of Bitcoin's meteoric rise. Here's why some are predicting a crash, and what that would mean. Why we buy cryptocurrency despite the risks Will those who've made cryptocurrency profits pay their tax? Meet the investors sticking with bitcoin despite the market crash Iceland will soon use more energy mining bitcoins than powering its homes What bitcoin crash?

Aussies eye initial coin offerings This is what happens to your bitcoin when you die Bitcoin buying among students so prevalent one school held a meeting Will Bitcoin go the way of MySpace and floppy disks? What the bitcoin bubble tells us about ourselves TGIF!

But don't spend your bitcoin on beer Bitcoin explained: The digital currency making millionaires. Technology Promising research aims to create a flystrike vaccine for sheep Mating research could help save northern hairy-nosed wombat Google AI mimics human 'navigation' brain cells — and takes shortcuts.

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Connect with ABC News. Got a news tip? Editorial Policies Read about our editorial guiding principles and the enforceable standard our journalists follow. Tax cuts by electorate By Catherine Hanrahan Regional electorates are likely to benefit most from the first tranche of the Government's new income tax cuts. Love is the universal language By music and pop culture reporter Paul Donoughue Jessica Mauboy and her co-writers found that, when you're trying to speak to so many different people, "it's nice to remember that love overcomes hate".

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