Japan’s financial regulator, the Financial Service Agency (FSA), has currently authorized 16 cryptocurrency exchanges to operate in the country. The FSA has also permitted 16 other crypto firms, including Coincheck, to offer crypto trading services, even though their business licenses are still under review.
Notably, Japan’s financial regulator told Bitcoin News on Wednesday that,
In Japan’s rapidly evolving digital economy, crypto companies that are operating while the FSA is still reviewing their licenses are called “quasi-operators.” While Japan still has fairly progressive crypto regulators, the FSA has extensively investigated the Coincheck hack which occurred in late January.
The financial regulator has also increased its regulatory oversight and is now more closely monitoring the operations of local digital currency exchanges. Moreover, the FSA has instructed local crypto businesses to follow stricter processes that are aimed at making digital currency transactions more secure.
Increased Regulatory Oversight
The FSA’s crackdown on crypto trading platforms has led to some local exchanges shutting down temporarily, presumably because their business operations did not comply with the regulator’s updated set of regulations. Due to the heightened scrutiny of cryptocurrency exchanges in Japan, several quasi-operators are now reportedly considering shifting their operations abroad to more crypto-friendly countries.
An FSA spokesperson told Bitcoin News that out of 16 local crypto quasi-operators, there are currently “three quasi-virtual currency broker dealers still being reviewed: Coincheck, Everybody’s Bitcoin Inc. (Minnano Bitcoin), and Lastroots.”
As covered, the Monex Group had acquired Coincheck after the hacking incident that led to over $530 million in NEM tokens being stolen. However, the Monex Group has not yet been licensed to operate in Japan, but expects that the FSA will authorize the crypto firm to operate in the country by September.
23 On-Site Inspections Of Exchanges
After the Coincheck hack, the FSA has been actively inspecting the business operations of all the nation’s crypto-related firms. In 2018, the financial regulator has so far performed 23 on-site inspections of major digital currency exchanges in Japan.
According to a report released by the FSA, the regulator has not authorized any new crypto firms to operate in Japan this year. Some members of Japan’s crypto community have speculated that the FSA is no longer reviewing applications from local exchanges, however, the FSA clarified, “There is no such fact that we stopped reviewing process.”
In July, the FSA had reported that around 100 crypto firms had expressed an interest in acquiring an operational license. These included Line Corp and Yahoo! Japan. Line has now reportedly launched its own crypto exchange called Bitbox, however, it does not provide crypto trading services to people located in Japan and the United States. At present, Bitbox is hoping that the FSA authorizes the company to operate in Japan.