Five cryptocurrency exchanges in Japan are closing after their operators reportedly withdrew their applications with the Japanese financial regulator to operate crypto exchanges. They are in the process of returning clients’ cash and crypto holdings.
Five cryptocurrency exchange operators in Japan have withdrawn their applications with the Japanese Financial Services Agency (FSA) to register their crypto exchanges, Nikkei reported on Thursday, adding that “More are expected to follow, as the FSA has given several exchanges a chance to voluntarily close before ordering them to do so.”
Tokyo Gateway and Mr. Exchange have withdrawn their applications; both were ordered by the agency on March 8 “to improve their data security and other safeguards after they were found to be lacking,” the publication noted. The two withdrawals follow three others by unregistered operators – Raimu, Bitexpress and Bit Station. The news outlet elaborated:
The companies will leave the exchange business after returning clients’ cash and cryptocurrency holdings.
Mr. Exchange issued a statement on Thursday, writing “We have made efforts to improve items that were pointed out” after receiving a business improvement order from the FSA. However, the company decided that it would be difficult to comply with the necessary requirements, and eventually elected to withdraw the application to register a crypto exchange. Mr. Exchange explained, “We are currently discussing procedures for smoothly returning customer assets.”
Since the payment services act went into effect and legalized cryptocurrency as a means of payment in April, crypto exchanges are required to register with the FSA. So far, 16 exchanges have been registered including Bitflyer, Quoine, GMO Coin, Zaif, Bit Bank, SBI Virtual Currencies, and Bit Arg Exchange.
In addition, 11 others are allowed to operate while their applications are pending. This number does not include the five exchanges that have withdrawn their applications. Among the 11 is Coincheck which suffered a massive hack in January and lost 58 billion yen worth of the cryptocurrency nem.
Following Coincheck’s hack, the regulator began scrutinizing crypto exchanges heavily. All exchanges were inspected; on-site inspections were conducted on all unregistered operators. “These exchange operators are required to have data security and other systems on par with those at the 16 registered exchanges,” the news outlet wrote, adding:
The FSA’s probes have so far found problems with corporate governance and internal controls. Some operators see little prospect of meeting the agency’s standards.
The FSA recently ordered a temporary suspension of two crypto exchanges and issued business improvement orders to five others.
Do you think more Japanese exchanges will withdraw their applications? Let us know in the comments section below.
Images courtesy of Shutterstock and Mr. Exchange.
Written by Kelvin Helms