The Japanese Financial Services Agency will issue an administrative penalty notice, and some exchanges may suspend their operations

Japanese regulators are reportedly planning to crack down on some cryptocurrency exchanges, issuing “administrative penalty notices” to several of them and suspending their operations.

The decision comes after the Japanese Financial Services Agency (FSA) investigated the consumer protection and anti-money laundering procedures of various exchanges in the wake of the theft of funds from Japanese cryptocurrency exchange Coincheck a few weeks ago.

Several of these exchanges have flaws in their processes, meaning they may be involved in money laundering or failing to keep customer funds safe.

However, it is still unknown what the specific penalties will be and which exchanges will receive the notice.

However, Coincheck is likely to receive a rectification notice requiring it to improve its system standards. This will be the second time the exchange has received such a notice.

The FSA began investigating exchanges a few weeks ago, assessing their risk management and cryptocurrency storage capabilities, but the results of the investigation have not yet been made public.

The regulator investigated both licensed and unlicensed exchanges, asking them to voluntarily report on their security protocols. Last month, the FSA launched an investigation into 15 unauthorized exchanges.

The FSA has launched a rigorous investigation into cryptocurrency exchanges in Japan since Coincheck admitted that it lost nearly $500 million worth of NEM coins (NEM) from its digital wallets.

Prior to the attack, Coincheck did not have a license from the FSA.