The Financial Services Agency (FSA) of Japan recently issued a formal warning to five overseas crypto exchanges for operating without proper registration. The exchanges are KuCoin, Bitcastle LLC, Bybit Fintech Limited, MEXC Global, and Bitget Limited. This warning comes after previous warnings in April 2023 to three of these exchanges, indicating a lack of compliance. Japanese law requires any platform offering cryptocurrency trading services in the country to register with the FSA and Finance Department, which these exchanges allegedly failed to do.
Operating without registration raises concerns about the safety of customer funds, as unregistered platforms do not fall under the regulatory oversight of the FSA. This means that customers may not have guarantees of proper asset management or protections under Japanese law in cases of disputes or financial losses. Additionally, without registration, customers cannot rely on asset conservation or compensation measures typically ensured for regulated entities. The FSA issued warnings to these exchanges for violating the Payment Services Act.
In efforts to stimulate the domestic crypto market, the FSA has announced possible reforms to Japan’s cryptocurrency regulations. This includes reducing capital gains taxes on cryptocurrency investments from 55% to 20%, aligning with stock market tax policies. The agency aims to support the recovery of the domestic crypto market, as evidenced by Japanese publicly listed firm Metaplaent’s plan to raise $62 million to fund Bitcoin purchases, following a Bitcoin-first strategy similar to MicroStrategy in the US.
In a separate development, Japanese authorities arrested Yuta Kobayashi, a 26-year-old accused of leading a group involved in laundering ¥100 million ($663,000) through Monero and other channels. While the methods used to trace the Monero transactions have not been disclosed, this arrest highlights ongoing efforts in Japan to crack down on crypto-related financial crimes. The FSA’s warning to unregistered crypto exchanges underscores the importance of compliance with regulations to ensure the safety and protection of customer funds in the cryptocurrency market.
