Japan’s financial regulator is reportedly getting ready to issue its first ever rejection of a business application to register a cryptocurrency exchange in the country.
FSHO Ordered to Improve Operations
Yokohama-based trading platform FSHO is likely to see its application denied by Japan’s Financial Services Agency (FSA), according to a Nikkei report.
The exchange had previously received two business improvement orders from the FSA earlier this year; the first being from 8th March until the 7th April and the second from 8th April until the 7th June. On both occasions the agency halted the exchange’s operations as it underwent improving its measures. These included implementing know-your-customer (KYC) procedures, in addition to ensuring that suspicious transactions were reported.
As the current suspension order runs out tomorrow, it’s believed that the FSA will deny FSHO after this. In the roughly translated report, it said:
“The Financial Services Agency will clarify its attitude towards rebuilding a healthy trading environment by withdrawing from a sloppy dealer.”
It went on to say that it judged that the elements to handle the cryptocurrency exchange were not in place to give it the satisfaction it required to approve it. Prior to the two suspension notices, FSHO had been permitted to continuing operating while its application to become a registered exchange was under review by the country’s financial regulator.
So far, 16 cryptocurrency exchanges in Japan have successfully met the FSA’s requirements to become registered with it. However, of the remaining 16 several have already shut their doors voluntarily or are still awaiting for approval or dismissal from the regulator. Of those with a quasi-operating status, Raimu, bitExpress, BitStation, Tokyo GateWay, and Mr. Exchange, are among the 16 who have withdrawn their applications.
The FSA initially began ramping up its enforcement efforts with the country’s crypto exchanges after the hack at Tokyo-based cryptocurrency exchange Coincheck. At the end of January, it became the victim of hackers, resulting in the loss of $530 million worth of NEM. In the wake of the event, FSA agents started conducting on-site inspections of Japan’s digital currency exchanges to determine the measures in place to ensure customer assets were safe.
It remains to be seen who will be next to face the gauntlet from the FSA or who will bow out voluntarily.
Featured image from Shutterstock.