Recently, in a total of five Japanese crypto exchanges shut down their operations as a result of Japan tightening the noose on exchanges. It all started with Coincheck hack at the start of this year that led the Financial Services Agency (FSA) of Japan to come forward and step up the oversight of cryptocurrency exchanges.
This has prompted a shakeout in the Japanese crypto market resulting in the entry of big names like Line, Monex Group and Yahoo Japan in this lucrative industry. With the total market size of cryptocurrency being somewhere around $250 billion, it’s no shockers everyone is eying the crypto market.
Hundreds of companies interested to run Japanese crypto exchanges
After Coincheck’s debacle, FSA introduces a law that requires crypto exchanges to register themselves with effect from April 2017. In the light of this law, FSA conducted onsite inspections and found many of these exchanges lacking in corporate governance and internal controls.
The agency asked the operator to make the required changes and gave them the chance to voluntarily close their business before FSA orders for same. The tougher regulations led five exchanges to withdraw their registration applications and shut down their businesses.
However, there are plenty of new players in the market that are all set to replace them. Reportedly, over 100 companies have expressed their interest in running the crypto exchanges.
If sources are to be believed, the popular chat app Line and CyberAgent, an internet services company are also in the race.
Monex group eyeing the troubled Coincheck
Since the Coincheck hack, the crypto market has shrunk but it has resulted in one good thing. The market is now eliminating the bad actors i.e. those crypto exchanges that were not careful with customer assets. With the entry of big players, the crypto market would soon see another boom.
When it comes to running a crypto exchange, companies can earn big profits from the transaction fees and expand their customer base.
Monex Group, a financial services company established in 1999, is currently negotiating the acquisition deal which is in its final stages. The deal that is expected to involve several billion yen most likely to get announced this week.
After the hack, FSA has yet to decide on the Coincheck registration as the financial watchdog has asked the exchange to improve its business practices. But if Monex gets involved, the agency would be much more inclined to approve the registration application.
Yahoo Japan is also in the crypto mix
With the way the crypto market is moving forward, it is likely that big technology and financial companies would shape the crypto industry. Another big name is Yahoo Japan, that is reportedly planning to buy about 40 percent of BitARG Exchange Tokyo by next month for the 2019 launch.
BitARG is not an active crypto exchange or is only limited to bitcoin trading, though it is registered with the FSA. The entry of Yahoo will help in propelling the currently floating crypto exchange sector forward.
Working towards creating a credible crypto ecosystem
In the currently turbulent crypto industry, acquisitions are gaining the momentum. Crypto exchanges that are failing to meet the FSA standards are either pushed into a collaboration with a big firm or simply shut down.
FSA is not going to stop here, it will further expand its inspections to even the registered exchanges and if needed, will take the corrective actions. As clarified by an official from FSA:
“For now, we’ll strengthen regulations and clear out the rot. That will lead to a healthier business environment in the future.”
It might look like a negative move by the agency at a first glance but through this, authorities are encouraging trust and credibility for the potential investors in the crypto market. It would further help in weeding out those companies and individuals that were simply looking for making quick profits.
However, the government has to strike a good balance between regulating the market and allowing it the space for growth.
What are your views on FSA being strict on japanese crypto exchanges? Do you think the entry of big players would be ultimately good for the crypto industry? Share your thoughts with us!