Following the massive hack of Japanese cryptocurrency exchange Coincheck, which resulted in over $500 million in NEM tokens being stolen from the exchange, Japan’s regulatory entity, the Financial Services Agency (FSA) has been cracking down on the cryptocurrency market. Feeling the pressure of impending regulation, two of Japan’s crypto exchanges have decided to cease operations, rather than bolster compliance efforts.
According to Japanese media outlet Nikkei, Tokyo GateWay and Mr. Exchange, are withdrawing their applications to operate as registered exchange operators under regulations imposed by the FSA. The decision comes following news that the FSA had called for each exchange to improve inadequate – by the FSA’s standards – cyber-security measures. Rather than invest in resources needed to improve security, the exchanges have decided to close after customer’s funds and holdings are returned.
Nikkei also reports that three other unregistered exchanges – bitExpress, Raimu, and Bit Station – have also withdrawn their license applications with the FSA, with additional withdrawals expected to follow as the FSA tightens its grip on exchanges through further regulation.
To date, the FSA has issued only 16 exchanges licenses to operate in Japan. Of the sixteen exchanges, was BitARG – a Japanese cryptocurrency exchange that is to be acquired by Yahoo Japan in an effort to launch a new crypto-exchange, led by YJFX executives. An additional 16 exchanges are being allowed to operate while the FSA considers their license applications.
Last week, Binance, the world’s largest crypto exchange by trading volume, was issued a warning by Japan’s FSA, which prompted the rapidly growing exchange to consider moving operations to the European island nation of Malta. Binance was welcome with open arms, and will open up shop in Malta in the coming months.
As the FSA steps up their regulation efforts, expect more exchanges to comply or face shutdown, either voluntarily, or forced by the FSA.