A recent report has revealed that digital currency exchanges in Japan are making plans to become fully operational.
The country’s top financial watchdog the Financial Services Agency (FSA) has revealed that 110 exchanges are in “various stages of registration”.
Although the FSA approved 16 new exchanges in 2017, it didn’t grant approval to any exchange within the country in 2018. This was mainly because the agency was investigating cryptocurrency exchanges in Japan so as to ensure that anti-money laundering (AML) procedures were in place.
In 2018, the agency started issuing “improvement orders” to displace potential cases of fraud or KYC noncompliance and started conducting on-site inspections.
The FSA official said that:
“We’ll continue with the on-site inspections, and we’ll make sure everything is sound.”
A BitFlyer representative said that:
“BitFlyer, amongst other top exchanges in Japan, received the improvement order based on a changing regulatory climate in Japan,”
The company voluntarily stopped opening domestic customer accounts for individuals looking to join the platform, in order to meet up with the FSA’s strict identification requirements.
The company stated that:
“bitFlyer Japan wholeheartedly apologises to our customers for not having met the JFSA’s exacting standards at this time. bitFlyer Japan’s team is united in our sincerity regarding this business improvement order. The safety and security of our customers and their assets on our platform has always been and will remain our primary concern,”
Meanwhile, bitFlyer released a statement on the 3rd of July to resume the processing of new accounts. Also, in the first six months of 2019, the FSA has approved 3 additional crypto exchanges which make the total number of operators to 19.
Reportedly, If approved by the FSA, these exchanges will need to comply with newly introduced obligations in the Payments Services Act. Furthermore, they will need to abide by the Financial Instruments and Exchange Act, enacted by the Japanese legislature on March 31 to take effect in April, 2020.