Japanese financial authorities are to investigate all cryptocurrency exchanges in the country after hackers stole $US530 million worth of digital money from Coincheck.
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 industry to stimulate economic growth.
The Financial Services Agency (FSA) has ordered improvements to operations at Coincheck, which on Friday suspended trading in all cryptocurrencies except bitcoin after hackers stole 58 billion yen ($534 million) of NEM coins.
Coincheck has said it will 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" instead of the more secure "cold wallet", which operates on platforms not directly connected to the internet, Coincheck said.
It also does not use an extra layer of security known as a multi-signature system.
The hack has drawn into focus Japan's approach to regulating cryptocurrency exchanges.
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.
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