Japan’s Cryptocurrency Regulatory Watchdog Orders FSHO Exchange to Shut down Operations
It is stale news that the Japanese Financial Services Agency (FSA) has increased regulatory oversight in the nation’s crypto space for quite some time now. However, the surprising aspect of the entire scenario now is that the FSA is on the verge of rejecting the application of a local exchange for the first time in its history.
FSHO Not Up to Standard
Back in March, the FSA slapped a one-month suspension order on FSHO and Bitstation cryptocurrency exchanges citing irregularities in their operations.
Out of the 16 registered exchanges in the country, FSHO is among those that are yet to get approved by the FSA and holds the infamous record of being the only crypto business that has received two business improvement orders from regulators.
According to a Finance Magnates report, the FSA has concluded that the FSHO exchange cannot meet up with the new regulatory guidelines as its systems are way below standard.
“The decision follows the ministry’s conclusion that Yokohama-based FSHO lacks the necessary systems to operate its business…by barring an exchange operator it found to be substandard, the agency aims to demonstrate its determination to re-establish a sound currency trading environment in Japan,” the agency declared.
Japan Becoming Less Crypto-friendly?
The Asian giant is the first nation to enact amenable laws for its cryptospace, making bitcoin legal tender and boosting mass adoption of the world’s flagship cryptocurrency within its territory.
However, the situation has gradually changed since the wake of the Coincheck hack that saw the exchange lose NEM (XEM) altcoins worth over half a billion dollars to cyberpunks back in February.
On April 6, 2018, reports emerged that highly reputable Japanese online brokerage, Monex Group had acquired a hundred percent shares of the embattled exchange for $33.5 million, after which Coincheck hinted it would expand operations to the United States.
“Japan may seem like it’s one step ahead in crypto, but in terms of deciding what’s a security or a token and attracting institutional investors, the U.S. and Europe are moving ahead,” said CEO of Monex, Oki Matsumoto.
Japan Tightens Regulations on Crypto Exchanges
On May 8, 2018, BTCManager reported that Japan had formulated a set of new guidelines to strengthen its crypto industry. The new regulatory paradigm requires all exchanges to upgrade their platforms making provisions for cold storage wallets and two-factor authentication (2FA). The firms must also take their KYC and AML operations more seriously, while restricting the trading of some privacy-centric cryptos, amongst other rules.
Amidst that backdrop, eight exchanges in Japan have notified the FSA of their intentions to close shop in the region.
“Eight deemed virtual currency exchange companies announce the intention to withdrawing registration application. One company confirms that it does not fall under the virtual currency exchange industry as a result of grasping the actual situation in detail,” the FSA said.
Although the agency has also hinted that quite many crypto-related firms have expressed interest to do business in Japan, the increased oversight may see more exchanges leave the region soon.