HitBTC, the Hong Kong-based crypto exchange has declared the suspension of crypto trading for its Japanese clients. The move comes as a huge blow to the market after it had only last week started on the way to recovery. The market has slipped back into the red mode with cryptocurrency prices tumbling down, Bitcoin being almost on the verge of critical support with a drop down of -1.51%, and Ethereum (ETH) being at -2.06%. Possibilities of reviving the trade services by HitBTC, however, have left a scope for hope.
Japan’s strict regulations make it hard for exchanges to carry on
HitBTC is the eighth largest crypto exchange according to Coinmarketcap and records an average daily volume of over $278M. The turbulence from the withdrawal hence comes as an expected result. The move is said to have been made to avoid any troubles with the Japanese Financial Services Agency.
The Japanese Payments Services Act came into effect in April 2017. The act legalized cryptocurrencies as a means of payments. However, certain mandates and regulations were also imposed, one making it compulsory for any exchange operating in Japan to register itself with the Financial Services Agency (FSA).
Notably, Binance, the exchange which is one of the largest in the world, is also known to be operating without a license. Out of the 16 exchanges who applied, as many as eight exchanges are reportedly withdrawing their license applications following the stricter rules in the Japanese financial market.
The withdrawal underway
With a new section added in the legal section of its website, HitBTC has directed the users to “not use our services and immediately cease using those if you are a resident or become a resident at any time of the state or region where HitBTC is not authorized to act”.
In case their system detects any activity originating from the country, the user shall then be asked to give a proof of their residence using KYC procedure.
A sense of relief, however, comes from a later announcement by the exchange. The exchange revealed that it has been working with a Japanese law firm since earlier this year “to get HitBTC through the local subsidiary setup and licensing procedure to resume its services”.
While the news has successively sent the entire cryptocurrency market in a state of rushed panic, HitBTC’s steps towards reinitiating services in Japan might bring a sense of relief again in between the stumbling prices.
Do you think Japan’s strict regulations for crypto trading will make it hard for the industry to survive in the once crypto-favorable market? Share your thoughts with us!