SBI Group, a financial services company group based in Tokyo, Japan, has canceled a business partnership with Chinese cryptocurrency exchange Huobi.
In December 2017, SBI announced that it will use Huobi’s technology, know-how and human resource on developing IT (information technology) infrastructure for SBI Virtual Currencies, including IT systems and security measures. It will also purchase 30% of equity in Huobi Japan and 10% interest in Houbi’s South Korean subsidiary, while Huobi will take a 30% stake in SBI Virtual Currencies.
In an announcement on Friday, however, SBI said it has scrapped its original plan to use Huobi’s technology, know-how and human resources in operating the exchange, and instead has decided to bring the efforts in-house. The firm said they need a system that incorporates higher levels of security and which can respond promptly to domestic and overseas regulations. As such, SBI will now utilize its own resources to build a system with enhanced security and sufficient processing capacity.
SBI’s decision comes after the recent efforts by Japan’s Financial Services Agency (FSA) to increase oversight of domestic crypto exchanges following the hack of over $400 million-worth of the XEM cryptocurrency from crypto exchange Coincheck in January.
Last week, the FSA issued business improvement orders to five crypto exchanges, including Coincheck, GMO Internet’s GMO Coin, Tech Bureau Corp.’s Zaif, Bicrements, and Mr. Exchange. It also suspended the operations of the Bit Station and FSHO exchanges based in Yokohama and Nagoya for one month.
SBI’s move also follows recent announcement that it had postponed the live launch of SBI Virtual Currency citing the need for further security enhancements.
“We decided that it will take some extra time to further strengthen security measures, assets management, and customer management systems to ensure the protection of cryptocurrency exchange users,” SBI wrote in the announcement.
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