Japanese Internet giant Rakuten is making a play to one day be as popular with crypto traders as it is with online shoppers. And it seems that Amazon's e-commerce rival in Japan won’t be taking any shortcuts on its regulatory compliance to get there.
On Wednesday, the company announced that it has partnered with the Silicon Valley-based blockchain security firm CipherTrace to ensure anti-money laundering (AML) compliance for its forthcoming crypto exchange, Rakuten Wallet.
“Regulatory compliance and anti-money laundering protections are of the utmost importance, and we believe CipherTrace will provide us the necessary tools needed to best support Rakuten Wallet,” said Yoshinao Kiyama, head of the Risk Control Department at Rakuten Wallet, in a statement.
Rakuten opened up registration for its new crypto exchange last month and is expected to launch sometime in June. Currently, only individuals who have either a Rakuten Bank account or a Rakuten member ID can sign up for an account on Rakuten Wallet, which is a wholly owned subsidiary of the company that runs Japan’s most popular e-commerce website.
Despite these barriers to entry, the firm claims its already seen “significant adoption” of its Tokyo-based exchange, according to today’s release.
Limiting sign-ups to traders who are already known customers to Rakuten gives the company a leg up with basic KYC and AML compliance. But its partership with CipherTrace will provide its exchange with an added layer of trust and security, said CipherTrace CEO Dave Jevans.
“Rakuten Wallet cares about its customers and will work with CipherTrace to make sure that exchanges have optimal protections for mainstream adoption,” he said in a statement. “It is our hope that proper compliance, transparency and increased trust will lead to more and more participation in the global crypto market. We are excited to blaze this trail with Rakuten Wallet.”
Last year, around $1.7 billion in cryptocurrency was lost to fraud, scams, and other unlawful practices, according to a report from CipherTrace released earlier this year. Out of that sum, the company estimates that over $950 million was stolen by criminals from crypto exchanges.
And these figures are almost sure to be eclipsed in 2019. The cyber security firm calculates that more than $1.2 billion in crypto has been lost to thefts, scams, and frauds this year already.
Rakuten’s partnership with CipherTrace is a timely move, as the country’s financial regulator, the Financial Services Agency (FSA), hunts down crypto exchanges with poor AML policies in preparation of an inspection from the Financial Action Task Force (FATF) later this fall.