In the latest development, Japan’s Financial Services Agency has issued warnings to foreign exchanges for operating without registration. It has issued warning letters to the following exchanges: KuCoin, bitcastle LLC, Bybit Fintech Limited, MEXC Global, Bitget Limited.
Notably, in Japan, cryptocurrency exchange business requires registration with the Financial Services Agency and the Financial Bureau. According to local news outlet CoinPost, these exchanges appear to have been providing services to Japanese users without authorization.
Unregistered businesses are not subject to supervision by the Financial Services Agency, so they cannot be checked for proper segregation of customer assets, and cannot be protected by authorities in the event of trouble or unforeseen circumstances. There is also a risk that they will not be covered by asset protection or compensation under Japanese law.
Japan Tightens Crypto Regulations
According to a piece of recent news, the Financial Services Agency is also preparing legislation to prevent domestic assets from being leaked overseas in the event that a cryptocurrency exchange headquartered overseas goes bankrupt. The aim is to properly protect the assets of individual investors, as there have been a series of cases of illegal leaks of cryptocurrencies.
Notably, Under the new regulatory regime, cryptocurrency exchanges would not be allowed to transfer assets of Japanese residents to foreign entities in case of a financial crisis in the country. This is a measure to prevent situations wherein local investors lose money due to bankruptcy by exchanges operating overseas.
Japan’s Focus on Innovation and Consumer Protection
Japan’s regulatory framework is evolving to address emerging trends in the cryptocurrency landscape. The government is exploring ways to regulate DeFi platforms without stifling innovation. Japan has also taken a forward-thinking approach to regulating stablecoins, focusing on innovation and consumer protection.
Japan’s newly elected prime minister has also voiced a vision of enhancing the cryptocurrency ecosystem, which has boosted expectations within the crypto community, signaling potential growth in the industry.
