Popular cryptocurrency exchange platform HitBTC has suspended operations in Japan on the account of a need to comply with local regulations. The Hong Kong-based cryptocurrency exchange has also made the bold decision of launching a regulated cryptocurrency exchange platform. The regulated crypto exchange will be a subsidiary of HitBTC.
The seventh-largest crypto exchange in the world based on trading volume cited the reason for suspending operations in Japan that the services provided by the exchange conflict with Japan’s financial regulator, the Financial Services Agency. The crypto exchange has suspended the services for all Japanese IP addresses as well as those users who have even once logged in to the crypto exchange using a Japanese IP address. For such users, HitBTC is asking for the customers to submit their ID and residential address details to confirm that the said customers are not Japanese residents.
In a public “Request For Information” notice, the crypto exchange has mentioned that the users with conflicts need to submit their ID and residential details. The notice also warns the users that if the users who are conflicted are not able to prove their residential status (which must be of anywhere but Japan), the exchange will suspend its services on their accounts and they will be unable to withdraw or trade their crypto assets from the exchange.
Another blog post from the Hong Kong-based crypto exchange further explained that the company has been in talks with the FSA, the financial regulator of Japan and that they are unable to meet the regulatory requirements set by the FSA to operate in Japan. All this has happened after the revision of the Payment Services Act declared bitcoin as a method of payment in the country. Since then, Japan’s financial regulator has mandated crypto exchange platforms to register with the agency and earn a license to operate in Japan, which is only possible if the crypto exchange is willing to abide by the guidelines set by the FSA. Crypto exchanges who were in operation before the revision of the Payment Services Act were provided exceptional grants to operate in the country without a license.
Currently, sixteen crypto exchanges have received their license to operate in Japan while 16 others are operating in the country on exceptional grant while their applications are being screened by the FSA. The revision of the legislation and the newly mandated procedure is being practiced very strictly by Japanese authorities as many cryptocurrency exchanges have received warnings to comply with the new guidelines and apply for a license in order to continue operating in the country.
The FSA has become more relentless in its practice after the Tokyo-based Coincheck was hit by digital thieves who were able to steal $530 million in NEM tokens. To our disappointment, the crypto exchange platform was operating without a license. Almost all of the crypto exchange platforms operating in Japan – or planning to operate in Japan – have been hit by this new regulation.