The cryptocurrency situation in Japan is evolving in many different directions. While Bitcoin is a legal payment method in the country, multiple exchanges are still facing regulatory scrutiny. So much, in fact, that two more platforms have been forced to shut down due to this mounting regulatory pressure.
Curtain Call for Tokyo GateWay and Mr. Exchange
Ever since Coincheck was hacked in early 2018, Japanese regulators have scrutinized the cryptocurrency exchange industry in many different ways. It is evident there are a fair few trading platforms which are under fire right now, even though they may not have been involved with hacks or anything like that. For both Tokyo Gateway and Mr. Exchange, it appears closing down was their only course of action.
More specifically, both of these trading platforms are facing a lot of regulatory scrutiny. With all trading platforms being scrutinized right now, it is certainly possible that irregularities may show up. Additionally, all trading platforms have to register with the country’s FSA and obtain a license to legally operate. It is unclear if either of these two companies successfully did so in the past few weeks.
For the time being, both companies are withdrawing their applications to register, but it is unclear if they will resubmit them in the future. With both companies being tasked with improving their overall security in terms of data and trading, it seems both companies are taking a step back in order to address these issues. Doing so will take a lot of effort, though, as protecting consumer funds needs to be the top priority.
All of the cash and other currencies held by these companies will be returned to their customers in the near future. It is a bit unclear when that will happen exactly, although it shouldn’t take all that long to do so. Additionally, it seems these are not the only two companies still under investigation as of right now. With 16 exchanges being allowed to operate without official licenses being approved, it is possible a few more platforms will meet a similar fate.
It is not the first time Japanese cryptocurrency exchanges have been forced to withdraw their FSA applications. Three unregistered exchanges took a similar course of action in the past few weeks. There are still a few other unregistered exchanges out there which will not be applying for official licenses, and they can either shut down voluntarily or hold out until the last moment.
All of this will help strengthen the cryptocurrency industry in Japan moving forward. It is evident the bad actors and those failing to meet security standards will need to be weeded out, as only the legitimate companies should remain. While Mr. Exchange and Tokyo GateWay never scammed users or suffered from any major hacks, their inability to provide top-notch security standards is still pretty troublesome.