As Japan cryptocurrency exchange Mr. Exchange and Tokyo GateWay shut down their business, the number of operators that have pulled out their registration applications sums up to five, with bitExpress, Bit Station and Ramu already being in this list. The increased regulations by the once crypto favourable Japan will affect the crypto investors and market negatively.
Japan cryptocurrency exchanges, Tokyo GateWay and Mr. Exchange to cease their operations
As the Japanese authorities tighten the oversight on the cryptocurrency sector, more and more cryptocurrency exchanges are shutting down their businesses. The Fukuoka-based Mr. Exchange along with Tokyo GateWay has withdrawn their applications to register as exchange operators with the Financial Services Agency (FSA) of Japan.
On March 8, the FSA ordered both the cryptocurrency exchanges to improve their internal protocols along with data security among other safeguards as they were lacking in these departments. The exchanges will return the cash and crypto holdings of their clients and then stop their trading business.
As a result of the increased regulatory scrutiny in Japan, several Japanese crypto exchange operators have decided to shut their businesses. Before the shutting down decision, both of these exchanges were trying to get a license as per the regulatory framework of Japan FSA introduced in April, 2017.
Tokyo GateWay mentioned in a blog post:
“While this is a regrettable result, at present we have determined that it is difficult to be in a state of readiness to be able to respond to changes in the virtual currency landscape, so we decided to withdraw the application for a virtual currency exchange business.”
As reported by the Nikkei, “More are expected to follow, as the FSA has given several exchanges a chance to voluntarily close before ordering them to do so.”
As regulations tighten, number of exchanges shutting down increases
After the big hiatus of Coincheck that lost NEM cryptocurrency worth of 58 billion yen at that time, FSA introduced the law for crypto exchanges to register themselves that took effect in April 2017.
Sixteen of the operators had already registered while other 16 were allowed by FSA to continue their operations while applications were undergoing review. This led the onsite inspections of these unregistered exchanges. On inspection, the FSA found issues with their internal controls and corporate governance.
Apart from Mr. Exchange and Tokyo GateWay, bitExpress, Raimu, and Bit Station have also withdrawn their registration application. As FSA has given the chance to voluntary close the operations before it orders them, it has been expected that more cryptocurrency exchanges will soon follow the suit.
Japan, which used to be a crypto favourable nation, has recently become way stricter on the cryptocurrency market. This has led the exchanges to shut down their operations that further affects the crypto investors and the market.
What are your views on Japan cryptocurrency exchanges shutting down their businesses? Do you think more exchanges will follow? Share your thoughts with us!