They may be able to weed out exchanges looking to scam, but the power to enforce that may also be abused to kill competitors.

I honestly don't think regulations can completely prevent hackings. Security can probably be improved by enforcing strict protocols that make it hard to pull off inside jobs, but there's really not much that can be done against external threats. We don't even know how hackings take place because they rarely publicize the information.

Either way, this is a victory for the Japanese crypto community. If nothing else, this implies that state regulators will be easing their foot off the gas a little.