Japan has been for the most part cryptocurrency-friendly, the reason for which as many as 16 cryptocurrency exchanges have been fully licensed to operate in the Japanese market over the last couple of years by the Japanese Financial Services Agency (FSA).
The FSA reports however, that 8 of these companies have indicated their intention to withdraw their applications. Several other companies, including Coinbase, Yahoo! Japan and Line Corp are undergoing the processes mandated by law to attain fully-fletched licensed status.
Credible reports point to an impending rejection of a crypto exchange application. Should this happen, it will be the very first time the FSA is throwing out a crypto exchange application. This appears to have gone viral, especially on Japanese media for obvious reasons.
The said exchange company has received permission from the FSA to do business in the cryptocurrency market in Japan (operate a crypto exchange) while its application undergoes a review by the FSA. The exchange company is essentially a “quasi operator” but is yet to be granted a full license for its operations.
It appears FSHO has had a rough ride for quite some time now. It has in the past been suspended from its operations on two consecutive occasions and was also slapped with two business improvement orders.
FSHO is on record to be the only company to suffer this fate – two punitive orders. The impeding rejection is on the heels of the second suspension that was handed down the company.
FSHO`s first suspension
The Japanese Financial Services Agency handed down a suspension order to all FSHO`s businesses that were connected to cryptocurrencies from March 8th to April 7. As follow up to the suspension, a business improvement order was issued. Corrective measures were to touch on four areas of operations of the exchange, and ones these we followed through, FSHO was to submit the corrective measures to FSA by March 22.
FSHO`s second suspension
The second suspension was handed down in April. This suspension came with a second business improvement order. Five business improvement areas were identified for improvement. Many of these orders were the same as the first order. Notable among the new areas identified are the “establishment of an effective management system including money laundering and terrorist financing” and a risk management system. The company was instructed to report the corrective measures to the agency by May 7.
The impending rejection
A report filed by Nikkei offers the rationale behind the impeding actions of the FSA: “the decision follows the ministry`s conclusion that Yokohama-based FSHO lacks the necessary systems to operate its business… By barring an exchange operator that it has found to be substandard, the agency aims to demonstrate its determination to re-establish a sound currency trading environment in Japan.”
Further reports suggest that the FSA found after reviewing FHSO`s application that the company had failed to sufficiently verify the identity of clients in business transactions were crime may be suspected to have occurred. Nikkei reported that: “The suspension period is due to end Thursday, after which the agency will bar the exchange from operating and deny its registration.”
Images from Nikkei Asian Review, agapegeek