Given the worsening situation, Japan’s financial regulator, the Financial Services Authority (FSA), has entered the cryptocurrency industry to monitor crypto exchanges in Japan. The regulator has issued warnings to four crypto companies, including well-known cryptocurrency exchange Bybit, to meet Japanese regulatory requirements and stop serving Japanese residents.
FSA issued a warning letter published on Friday. Regulator noted that the world’s fourth largest crypto exchange by volume, Bybit, continues to operate without registration in the country. However, all crypto trading services of the exchange are against the country’s laws and regulations. In addition, three other exchanges Bitget, MEXC Global, and BitForex also received the same notice.
Moreover, this is not the first time that the Japanese regulator has sent a warning message to the Singapore-based exchange, Bybit. The crypto platform also received a letter from the FSA in May 2021, accusing the firm of operating without a license.
Bybit has long been under scrutiny by financial regulators and has received warning from Canadian agencies. Additionally, in early March 2023, Bybit announced that it was suspending US dollar (USD) deposits for international and national clients.
The crypto company announced on March 6:
“We have temporarily suspended USD deposits via Wire Transfer (including SWIFT) due to service outages from our end-point processing partner until further notice,” the exchange said, adding that withdrawals will be stopped from March 10.”
A slowdown in the cryptocurrency market in 2022 also affected the exchange, forcing the company to cut employees by 30%. The exchange is under the regulator’s intense monitoring, so there could be further changes, but for now, the crypto firm appears to be operating as usual.
Japan To Set Crypto Regulations
Japan wants the US (United States) and the EU (European Union) association to create a regulatory structure for the crypto industry. This fact is behind the development of cryptocurrency regulations in the country. Regulators believe that the cryptocurrency market is so large that it should be treated like banking institutions.
In 2018, millions of dollars of digital assets were stolen from the Japanese cryptocurrency exchange Coincheck. Moreover, hackers stole $460 million from Tokyo-based bitcoin exchange Mt. Gox in 2014.
The consequences of these users’ losses urged Japan’s government to set new rules for crypto exchanges. In 2020, the FSA created new rules for crypto companies that require them to register with the authority and acquire a license to operate in Japan. However, regulators are increasingly paying attention to unlicensed cryptocurrency exchanges. Because, services from unregistered platforms can result in market manipulation, money laundering, and fraud.
The FSA also issued a warning letter in 2021 to the largest cryptocurrency exchange, Binance, for serving without the necessary license.