Japan's financial watchdog, the Financial Services Agency, has issued warning letters to five cryptocurrency exchanges that are currently operating without a license in the country. This move is seen as a part of its intensified regulatory efforts against crypto exchanges that fail to comply with the country's laws.
In a significant development in Japan’s cryptocurrency industry, the Financial Services Agency (FSA), the country’s financial regulatory authority, has issued warning letters to five undefended cryptocurrency exchanges operating in Japan. The action signals the regulator’s continued commitment to tightening its grip on cryptocurrency exchanges that are not complying with the country’s laws.
Unregistered Exchanges Sent Warning Letters
This development comes as a result of the FSA’s ongoing investigation into the operations of cryptocurrency exchanges within its jurisdiction. The five unregistered exchanges—Quoine, Bitbank, BTC Box, Bit Point Japan, and Tech Bureau—were served with warning letters notifying them of the regulator’s concerns.
The FSA’s actions are based on the revised Fund Settlement Act of 2016, which requires all cryptocurrency exchanges in Japan to be registered with the regulator. These five exchanges are believed to be running their operations without the necessary official license.
Related: Coincheck: First Japanese Crypto Exchange to Make its Mark on Nasdaq
Tightened Regulations Following Coincheck Hack
This action from the FSA is in response to the prevalent issues regarding security lapses in the cryptocurrency industry, most notably the notorious Coincheck hack. The Tokyo-based cryptocurrency exchange was hit by a massive cyber-attack in January 2018, which resulted in a loss of approximately $530 million worth of NEM tokens—the largest crypto theft in history.
In the aftermath of the Coincheck incident, the FSA intensified its regulatory efforts to ensure the security measures taken by cryptocurrency exchanges are up to the mark. The regulator has been conducting inspections and issuing business improvement orders to several crypto exchanges to enhance their security systems and protect their users.
Related: SEC Gives Green Light to Coincheck - The Pioneer Japanese Crypto Exchange to Join Nasdaq
Japan’s Approach to Cryptocurrency Regulation
Japan has been known for its progressive stance towards cryptocurrency. It was one of the first countries in the world to recognize Bitcoin as a legal payment method and regulate cryptocurrency exchanges. Despite the friendly attitude, Japan’s regulatory landscape is characterized by strict laws aimed at protecting consumers and preventing illicit activities such as money laundering.
The FSA’s warning to the five exchanges shows the regulator’s determination in maintaining the standards set by the country’s regulatory framework. The crackdown serves as a reminder to other exchanges operating in the country to comply with the rules or face regulatory action.
Related: Crypto.com Receives Warning from Poland's Financial Supervision Authority
Conclusion
The warning letters sent by the FSA to the five unregistered exchanges highlight the agency’s ongoing commitment to ensuring the safety of cryptocurrency investors in Japan. This move sends a clear message to crypto exchanges operating in the country about the importance of complying with existing regulations.
Through these regulatory efforts, the FSA aims to strike a balance between supporting the growth of the cryptocurrency industry and preventing potential risks. The agency’s actions are a testament to Japan’s commitment to creating a safe and regulated environment for cryptocurrency operations.
In light of these events, it is clear that Japan’s approach towards cryptocurrency regulation is a model worth considering by other countries grappling with the challenge of regulating the rapidly-evolving cryptocurrency industry.
