Asia is fast becoming a cryptocurrency hub. However, during the start of 2018, strict regulations made it difficult for many investors in Asia. China now banned both ICOs and cryptocurrency trading in the country. Unfortunately, China isn’t the only country that is tightening their rules and regulations. India’s Central Bank also announced that it is going to ban cryptocurrencies in the country. The same goes for Japan too.
Japan FSA’s Move for Strict Review
Japan’s Financial Services Agency is now imposing strict review standards for crypto exchanges. The aim of these changes wants to avoid another digital currency heist just like what happened with Coincheck. According to FSA, “we need to introduce a new perspective in reviews of registrations”.
In January, Coincheck suffered from a hack. According to reports, around $530 million worth of NEM coming from its clients were lost. Right after the news made headlines, regulators took the necessary steps in order to prevent this from ever happening again. On April 16, Monex Group bought Coincheck for $33 million.
However, it is important to note that the registration will most likely include not only mere documentations. FSA will also do preliminary visits that will investigate exactly how the operations are going to be managed. The question is if it is a practical move for the growing crypto market in Japan.
Japan already worked to nurture the budding industry. In fact, Bitcoin and other digital currencies have been considered a valid form of payment in Japan in April 2017. It is also true that Japan has been focusing on compliance when it comes to rules on payments in order to protect consumers.
Kraken Stopping its Services to Japan
Kraken, a San Francisco-based crypto exchange company has announced in April that it is already going to stop offering services to Japan residents. It is going to stop accepting deposits from Japan, despite the fact that it is one of the biggest markets for digital currency trading. As for existing clients, they have until mid-June before Kraken stops serving them. They will have to withdraw their funds by the end of June.
According to Kraken, “it is impractical to continue service for Japan residents”. They added that “careful consideration of revenue against the cost and resources required to maintain service”.
It is possible that the new regulations made the 13th largest crypto exchange to halt its operations in Japan. It is possible that the cost of compliance makes it less attractive to enter Japan’s crypto market.
Binance is also stepping away from Hong Kong. It is instead moving towards Malta, a small country in the Mediterranean Sea that is known for its blockchain friendly rules and regulations.
Still Dominating the Charts
However, despite the clampdown by regulators, trading volumes are still up. A research giant Morgan Stanley has indicated that the transactions are coming mostly from China, South Korea, and Hong Kong. In addition to this, even if UK has the highest number of crypto exchanges registered, it only contributes to 1% of the total trading volume.
Malta has accounted for close to $1.2 billion of the entire total trading volume worldwide. It is then followed by South Korea with $900 million and Belize with $700 million. One of the reasons for Malta’s performance is mainly because of Binance. However, it is true that majority of the trading volumes came from Asian countries.