It has come to light that Coincheck Inc., a Japanese cryptocurrency exchange, was hacked and has lost 58 billion yen ($533 million) worth of NEM deposits made by 260,000 investors.

The company promises to refund the entire amount in yen from its own resources, but whether this will happen is uncertain at this point. Coincheck must disclose all pertinent information and deal swiftly with this situation, prioritizing the investors' best interest.

Coincheck had touted secure management of cryptocurrency deposits, saying they were kept off the Internet. But this was not true with NEM.

Naturally, the Financial Services Agency (FSA) immediately issued a business improvement order to Coincheck.

The FSA needs to thoroughly investigate the incident and closely examine the eligibility of the company to operate an exchange.

When the FSA introduced a registration system for all cryptocurrency dealers last year to promote industry regulation, Coincheck was still being screened and given the status of a "dealer equivalent" as a transitionary measure.

But even though its qualifications had yet to be confirmed, it aggressively solicited business through TV commercials and other avenues. This, in itself, was highly questionable, and something obviously needs to be done to prevent recurrences.

Aside from risks of hacking, cryptocurrency raises various issues that must be addressed.

Initially, cryptocurrency was expected to serve as a means for settling accounts. But in reality, it has become an investment item, and its value fluctuates wildly. Unlike legal currency, whose value the central bank strives to keep stable, virtual currency can become totally worthless in a flash.

In the early years, most users probably understood how cryptocurrency worked. But as it grew in popularity, it is quite likely that less informed consumers have come to invest in it.

As Coincheck did before the incident, cryptocurrency dealers rely massively on TV and online advertisements, many of which are "image-oriented" rather than factual or informative.

Industry associations claim they are considering implementing self-regulatory measures for advertisements, which they should proceed with promptly.

And more than anything, they must fully explain the risks consumers will face.

Cryptocurrency's technology base is believed to be applicable to a broad range of financial services and digital currencies of the future, and further development is welcome in itself. But as unexpected negative results and side effects are also foreseen, addressing such issues is of crucial importance if the technology is to advance as it should.

Guaranteeing the safety of deposits and trading is the very minimum condition required of cryptocurrency as a means of payment. And since it also is a financial instrument, it must be subject to certain regulations to protect investors. One question, specifically, is if it is appropriate to maintain the present situation that allows transactions of huge sums with only modest cash reserves.

Around the world, arguments are being made in favor of regulating cryptocurrency lest it becomes an instrument for money laundering. And as virtual money comes into broader use, it could affect the established financial system and the managed currency system. This is an urgent matter that must be discussed widely.

--The Asahi Shimbun, Jan. 31