In first of its type, Japan’s FSA will be not allowing the FSHO cryptocurrency exchange to register under revised Payment Services Law. After Coincheck hack, Japanese regulators are tightening the regulatory noose. However, big names like Coinbase that recently announced the launch of its Japan office are unperturbed by strict regulations.
FSHO to be denied registration after getting suspended twice
According to the local media channel, Japanese Financial Services Agency (FSA) has finally decided not to register cryptocurrency exchange FSHO under the revised Payment Services Law.
In order to operate in the country, a cryptocurrency exchange needs to be registered with the FSA under this law. As a result of non-allowance by FSA, FSHO will be now forced to withdraw its application.
The exchange has already been issued suspension orders twice in March and April. It resulted in the suspension of the crypto related activities for the exchange both those times. FSA cited the lack of appropriate measures against money laundering the reason for the decision. But the exchange hasn’t made any improvements since then.
In case, FSHO does not withdraw its application for registration by Thursday, this is when the order of FSA expires, the registration of FSHO will be rejected. This will mark it the first such case since April 2017, when the registration system was first introduced.
The local media source stated:
“The first time it has done so. The decision follows the ministry’s conclusion that Yokohama-based FSHO lacks the necessary systems to operate its business…By barring an exchange operator that it has found to be substandard, the agency aims to demonstrate its determination to re-establish a sound currency trading environment in Japan.”
Japan going strict, big names like Coinbase unperturbed
About 16 of the crypto exchanges originally applied for the registration. These exchanges have been working as quasi-operators that means until they receive the approval, they can provide crypto services. Now, out of these 16, eight will be withdrawing their applications.
After Coincheck’s hack, Japan FSA has strengthened the regulations and cracked down hard on the crypto market. There have also been discussions on further implementing stricter regulations that are yet to be made public.
In the meantime, several exchanges have decided to work towards self-regulation so that the micromanaging of the regulators could be avoided and the chances of hacks could be reduced potentially.
In response, a group called Japan Virtual Currency Exchange Industry Association has been created that worked towards restoring confidence in the market.
Moreover, looks like companies are unperturbed by these regulations as apparently 100 of exchanges are already planning entry into the market. Several big names have also shown interest as well such as Yahoo Japan and Line Corp.
Recently, one of the biggest crypto exchanges, Coinbase launched its office in Japan marking its official entry into the country. Fintech leader and former Morgan Stanley employee, Nao Kitazawa has been appointed as the CEO. The company has been planning to be a regulated exchange and work in compliance with regulations.
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Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.