Japan’s Financial Services Agency May Issue First Crypto Exchange Application Denial

News, Regulation | June 6, 2018 By:

The Japanese Financial Services Agency (FSA) is reportedly set to reject a crypto exchange application for the first time.

According to a report from Nikkei, crypto exchange operator FSHO will likely see its registration application denied by FSA due to its previous failures to comply with Japan’s revised payment services law.

The FSA twice issued business suspension orders against FSHO in March and April, judging the company’s measures against money laundering to be insufficient. However, FSHO is said to have not improved its measures. If FSHO does not withdraw its application for registration as a cryptocurrency exchange business by Thursday, when FSA’s order expires, the FSA will reject its registration.

At one point, there were 32 crypto exchanges operating in Japan, 16 of which have received approval from the FSA. The remaining 16 have also been given approval while their applications are being reviewed. Since the Coincheck hack in January, however, the FSA introduced tighter regulations for exchanges, including developing and implementing improved data security measures.

As as result, eight crypto exchanges have indicated that they will withdraw their applications. These include Tokyo Gateway, Mr. Exchange, Raimu, Bitexpress, Bit Station, Campfire, Debit, and Payward Japan, which operates Kraken exchange.

“Eight deemed virtual currency exchange companies announce the intention to withdraw registration application,” the FSA said. “One company confirms that it does not fall under the virtual currency exchange industry as a result of grasping the actual situation in detail.”