More Japanese Cryptocurrency Exchanges to Close Following FSA Crackdown
Nikkei reports that two more crypto exchange firms are exiting the market following a heightened oversight by the financial regulator. this makes five the number of exchanges that have closed their operations in Japan following the more than $500 million heist in January.
Tokyo GateWay and Fukuoka based Mr. Exchange are withdrawing their application to register with Japan’s Financial Services Agency (FSA) as exchange operators. The FSA had ordered the two to enhance their data security and other safeguards at the beginning of the month after an inspection of their systems.
According to a CCN report, the two operators will shut their businesses after returning their customers’ fiat and cryptocurrency holdings. The report says that the two operators will afford their customers enough time to withdraw their funds before they deactivate their trading platform.
By the time of going to press, the two operators had not issued any announcements.
FSA Tightening the noose on crypto
The FSA has been very active to bring sanity in the crypto trading industry through introduction of new measures. In April last year, a new law took effect that required all cryptocurrency exchange platforms to register with the financial services regulator. So far, sixteen firms have registered while the FSA allowed another sixteen to continue with their operations while their applications were being reviewed.
Following the January Coincheck heist of more than $530 million, the regulator has enhanced the crackdown on the crypto exchanges with demand for enhanced security measures.
In efforts to mending the gaps and ensuring citizens are protected from unscrupulous exchanges, the FSA has issued numerous orders to market participants but has always granted them an opportunity to adhere to them.
Things are getting thick for sub-standard exchange operators
Today’s report indicates that three more unregistered exchange operators - Raimu, bitExpress and the suspended Bit Station - are also in the process of withdrawing their license applications with the FSA. Nikkei says that more application withdrawals are expected to follow.
FSA has however indicated that it has given various crypto exchanges a window to close voluntarily.
“We have offered a chance for voluntary closure before we can give our orders,”
Nikkei quotes its anonymous source.
Even the large exchanges have not been spared by the stringent measures being implemented by the FSA. Coincheck is one of the exchanges that is currently operating without a license. Other large firms that want to start operations in Japan are getting it rough as they are yet to get licensed, Binance being one of them.
With the grace period fast approaching, it is expected that the regulator will crack the whip and close the operations of the exchanges which will not have met the requirements. Expect the imminent closures of various Japanese crypto exchanges to attract far-reaching mainstream media attention, and therefore, an increased sell of cryptos from investors who will not understand that the security aspects troubling crypto exchanges has nothing to do with the coins themselves.
What’s your opinion on the spate of crypto exchanges closures in Japan? Is the FSA right to institute tight security measures on crypto exchanges? Share your thoughts with us in the comment section.