110 cryptocurrency exchanges are in “various stages of registration” with Japan’s Financial Services Agency (FSA), according to a statement that the regulator made to Bitcoin.com earlier this week.
The figure is especially surprising considering the fact that the FSA did not approve a single cryptocurrency exchange to operate within the country throughout 2018. Only 16 exchanges were approved by the FSA in 2017.
Indeed, it seems that the FSA’s attitude toward granting the licenses is continuing to evolve in a more positive direction.
Three exchanges have been approved by the agency so far this year–Rakuten Wallet (previously Everybody’s Bitcoin) and Decurret were approved on March 25th; on January 11th, Coincheck was registered (following its acquisition by Monex.)
If the exchanges manage to gain approval from the agency, they will be required to comply with the requirements introduced in the Payments Services Act and Financial Instruments and Exchange Act that was passed by the Japanese legislature on March 31st, although the act will not be enforced until April of 2020.
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Both of the acts introduced stricter obligations around data protection, custodianship, and the onboarding of new customers. Licensing fees are also more expensive under the acts.
Is the FSA Re-Opening Its Heart to Crypto?
It appears that 2018 may have been a year for the FSA to restructure its licensing process as well as the ways that it enforces the regulations it has put in place following the Coincheck hack that occurred in January of that year–$530 million in cryptocurrency was stolen, the largest cryptocurrency theft in history.
Indeed, over the course of the year, the FSA began issuing “business improvement orders” to exchanges that weren’t making the cut for licensure. The Agency also began conducting on-site inspections of cryptocurrency exchanges, and eventually began forcing shutdowns of exchanges that were repeatedly unable to meet the requirements necessary for receiving a license.
But exchanges who have managed to stay open throughout the last two years may also benefit from the FSA’s evolving atttiude.
Previously, Japanese cryptocurrency exchange Bitflyer eventually agreed to stop opening new domestic customer accounts in order to stay compliant with the FSA’s strict KYC requirements. However, the exchange announced on July 3rd that it was accepting new Japanese users once again.