Japanese regulator sends warning letters to five unregistered cryptocurrency exchanges

By: Bitcoin.comNews

Japan’s Financial Services Agency (FSA), Japan’s financial regulator, announced on November 29 that it had sent warning letters to five cryptocurrency exchanges accused of operating without registration. The five crypto exchanges are Bitcastle LLC, Bitget Limited, Bybit Fintech Limited, Kucoin, and MEXC Global.

According to Coinpost, crypto exchanges targeting Japanese residents must register with the FSA or the Financial Bureau. The regulator said it cannot supervise unregistered crypto trading platforms and therefore cannot confirm whether they properly segregate customer assets.

The FSA said that this lack of supervision may result in the authorities being unable to help victimized users in the event of disputes or unexpected situations. The regulator also warned that Japanese residents who use these unregistered exchanges may not be able to obtain asset protection or compensation under Japanese law.

By issuing the warning letter, the Japanese regulator joins its counterparts in France and Hong Kong, who have also targeted unlicensed crypto trading platforms. Regulators in France went a step further, urging residents to take precautions when trading with such platforms. In Hong Kong, the Securities and Futures Commission has threatened legal action against entities operating illegally in the region.

The FSA’s warning comes at a time when Japan is seeking to establish a leadership position in the Web3 space. For example, People’s Democratic Party leader Yuichiro Tamaki has advocated for tax and regulatory reforms on crypto assets in media reports. As recently reported by Bitcoin.com News, Tamaki’s party has proposed a separate 20% tax on crypto assets.

As of the time of writing, none of the five exchanges have issued a statement in response to the FSA’s warning letter.