The Main Reason Why More Cryptocurrency Exchanges Will Close Shop in Japan

Undoubtedly, the $530 NEM Coincheck heist is still causing reverberations in the booming Japanese cryptocurrency market. While the Japanese Financial Security Services redoubles their regulatory efforts, two more exchanges- Mr. Exchange and Tokyo GateWay are resigning. They are now pulling out their FSA application according to a new report from Nikkei Asian Review.

By doing so, reports indicate that they shall now focus their cryptocurrency exchange services to locals only. This is after persistent prompts by the FSA demanding reinforcement of their weak security protocols following a review shortly after the devastating Coincheck hack.

Despite the suspension and shift of business model, they will have to reimburse customers all their cash and digital currency holdings as the law directs.

“The FSA on March 8 ordered both to improve their data security and other safeguards after they were found to be lacking. The companies will leave the exchange business after returning clients’ cash and cryptocurrency holdings.”

BitStation and FSHO are Already Out

Already, it’s curtain down for two exchanges- BitStation and FSHO. This comes after FSA’s assertions of their rigidity and failure to adjust existing security infrastructure.

Unfortunately, the FSA is upbeat and expect more exchanges to fall short of their stringent requirements and cease operations.

“More are expected to follow, as the FSA has given several exchanges a chance voluntarily close before ordering them to do so”.

Japan Remains Crypto Friendly Despite FSA Oversight

Apparently the FSA is tightening the regulatory news even in the wake of self-regulation within the nascent sector. Unlike China, Japan’s cryptocurrency relationship continues to warm up. Fact is, it is the leading country in Asia when it comes to Bitcoin adoption.

At the moment, more than 10,000 merchants accepts Bitcoin as a form of payment. In face economists estimate that revenue from cryptocurrency taxation will spike to $9.2B in 2018.

Therefore it is no surprise that exchanges continue to proliferate in a niche that remains largely without proper regulation. However, in the wake of recent Coincheck breach, regulators are heeding calls for consumer protection and are now enforcing their April 2017 registration directives.

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