Getting Into Japanese Market Won't Be Easy For Coinbase

On June 4, Coinbase - one of the largest wallets and cryptocurrency exchanges in the US - revealed its plans to enter the Japanese crypto market.

According to Japan's FSA, the country's major regulatory body gathered data from 17 local cryptocurrency exchanges and found that as of the end of March 2018, there were at least 3.5 million crypto traders.

This status of cryptocurrencies has been confirmed by the FSA.Therefore, since the amendment of Japan's Payment Services Act in April 2017, all crypto exchanges in the country are required to register with the FSA. Currently, the licensing scheme has seen a total of 16 operators cleared to serve the Japanese market, including major players such as SBI Group, while Coinbase intends to apply for a license "Within the year."

The FSA seems to have a tight grip on local exchanges, firmly reacting to security breaches after two high-profile Japanese crypto exchange scandals: January's unprecedented $532 mln Coincheck hack and the infamous collapse of Tokyo-based Mt. Gox.For example, in March, the watchdog sent "Punishment notices" to seven crypto exchanges and temporarily froze the activities of two more after a round of inspections.

Shortly after the news, two local exchanges, namely Mr. Exchange and Tokyo GateWay, decided to close up shop over regulatory compliance.

The FSA conducts on-site inspections of exchanges that have their registration pending and have asked all crypto exchanges to submit a risk management system report in the wake of the Coincheck hack.

As a result of the FSA's thorough supervision, Binance, one of the world's largest crypto exchanges that had opened an office in Japan, turned to Malta after the Japanese regulator had issued a warning.

It's called the Japan Cryptocurrency Exchange Association, and, as Cointelegraph previously reported, the idea behind this body is to set the standards and expectations of the exchanges which are not currently registered and up to scratch with the FSA.Indeed, Taizen Okuyama, president of Money Partners Co., who has assumed the post of chairman, said the goal of the JCEA is to dispel customers' anxieties and achieve the sound development of the market.

On May 30, the first foreign player entered the Japanese crypto exchanges market, when local exchange BitTrade was bought for S$67 mln by Singaporean multi-millionaire and entrepreneur Eric Cheng.

While Coinbase plans to establish their operation in Japan "Within the year," the Japanese arm of the internet giant Yahoo! will reportedly open their own exchange "In April 2019 or later," albeit through buying 40% of BitARG Exchange Tokyo instead of creating a new outlet.