The top story for the crypto market this 2018 is the number of regulatory changes applied all over the world. Japan has been one of those countries that have embraced cryptocurrencies. However, Japan is also leading the rest of the other crypto-friendly countries when it comes to regulating the industry.
One of the things that bothered Japanese regulators is the number of hacking incidences. For cryptocurrency exchange Coinbase, they are not concerned regarding the regulatory changes that Japan’s Financial Services Agency (FSA) made.
Mike Lempres, who works as Coinbase’s chief policy officer mentioned that increased scrutiny among crypto exchanges is a good thing. He said that “The Japanese government is more focused on security”. He also added that “That is good for us”. He further discussed that discussions between FSA and Coinbase stating that “We are…committed to getting it done. It will certainly be in 2019”.
A Bold Statement
This is considered a bold statement coming from Coinbase considering that the virtual currency license of the company has not been approved since December 2017. This was during the time before the FSA even tightened up their regulations on operating crypto exchanges.
After Coincheck was hacked for a record $530 million in January of 2018, regulatory changes were applied. In fact, even Kraken decided to leave Japan and have their office elsewhere following the development.
For Coinbase, they believe that the hacks are not really harmful to the crypto industry. Instead, this will attract credible companies that have a trustworthy track record. Lempres mentioned that “Japan has been an active large market from the beginning, and has proven resilient as it bounces back from several bad experiences”. He also said that “we think there is great demand for a trusted provider of services here”.
What Makes Coinbase Different?
Coinbase isn’t entering Japan’s market without any plan. Lempres explained that Coinbase is going to devote more resources in order to make sure that the clients’ assets are safe. He pointed out “dozens” of the company’s 550 employees working full-time on asset security.
Coinbase is also known for using the crypto assets stored in its custodial vault. The funds that are found online as Lempres explained is only 1% of the company’s assets. And the remaining 99% is stored in cold stored. And to give investors peace of mind, the ones that are found in “hot wallet” are fully insured.
One of the main concerns of Coinbase though is that the security apparatus is centered in the US. This could be a problem with the FSA. The Japanese regulators want Coinbase to store the assets in Japan. And therefore, it will be easier for the FSA to monitor these resources. Lempres mentioned that “We have everything built to protect our storage…in the US”. He added that “We won’t do anything to even raise possibility of a hack. It would be hard for us to duplicate what we do in the US today in Japan and other countries”.
The plan of Coinbase to expand in Japan was reported last June when the company hired Morgan Stanley Japan investment banker named Nao Kitazawa. He now works as chief executive of Coinbase Japan.