Japan is quite serious when it comes to cryptocurrencies. Unlike other countries that banned cryptos, Japan has a number of companies that are now accepting digital currencies. Though Japan is quite open when it comes to crypto adoption, the country hasn’t forgotten how to prioritize consumer protection. After Coincheck getting hacked losing $500 million, Japan’s Financial Service Agency came up with rules when it comes to crypto exchanges operating in the country. This goes true for both new and existing crypto exchanges.
Yokohama-based trading platform FSHO has become Japan’s first crypto exchange operator to get denied by the new rules set by the Financial Services Agency. It was due to a “sloppy” operational infrastructure and the lack of compliance with the financial guidelines that caused the rejection to take place.
FSHO was allowed to operate in Japan along with 16 other crypto exchanges while their applications were under review. However, it isn’t exactly surprising why FSHO was denied. In March, there were business suspension orders given to the company. The company basically failed to report high-value trades, not to mention showed signs of participating in money laundering. The cryptocurrency exchange also doesn’t follow strict implementations of know-your-customer norms.
In a report, it was said that “The exchange did not adequately verify the identity of customers in transactions suspected of financial crime”.
Serious Problem with Hacking
Hacking is a problem in the crypto space today. There were already many cases of hacking and mostly, it happened in crypto exchanges. And for this reason, Japan made sure that they are going to take a closer look at those crypto exchanges operating in the country. Since a great volume of crypto trades happen in Japan, this move should be welcomed.
Aside from hacks to crypto exchanges, the 51% attack is now making headlines. It involves renting hashing power in order to overrun a particular network. Recently, Litecoin founder Charlie Lee spoke about the robust security measures being done by Litecoin to avoid this type of scenario.
Expect More Rejections?
It is possible that this is just the start of Japan’s crackdown on cryptocurrency exchanges that don’t show enough security measure. There is a possibility that more crypto exchanges will be denied to operate in the country. In fact, Kraken has withdrawn offering its services to Japan. On the other hand, you have the likes of Coinbase even revamping their team and choosing to meet with Japanese regulators in order to cater to the market.
And Coinbase isn’t the only one trying to enter the Japanese market. There are almost 100 other companies that are already looking forward to becoming part of Japan’s growing crypto space. This includes companies such as Yahoo! Japan and Line Corp.
There are plenty of reasons why Japan remains a hotbed for cryptocurrencies. For instance, crypto adoption is rapidly becoming popular. There are ATMs dedicated for cryptos while there are also stores that are starting to accept cryptocurrencies as payment. Considering all these things, it’s an opportunity that cryptocurrency exchange businesses don’t want to miss out on.