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A senior executive in Coinbase's cryptocurrency exchange expressed the belief that the exchange will soon get a license to operate in Japan, despite the strict regulatory position of the Japanese regulators.
According to Nikkei Asian Review, Mike Lempres, Coinbase's Chief Policy Officer, said the process with the Japanese regulator is "going well". He assured that US-based cryptocurrency operators will "certainly" get their license in 2019.
Coinbase announced in June that it was expanding to Japan after opening its office in Japan and named Nao Kitazawa as CEO of the Japanese office. The move meant that Coinbase would have to get approval from the Japanese Financial Service Agency (FSA), a process that proved to be herculean for many operators.
Stringent cryptocurrency rules in Japan
Japan has become one of the countries most favorable to cryptocurrency following its decision to accept and regulate cryptocurrency markets. However, following an important attack on the exchange of cryptocurrencies, Coincheck in January, the FSA has intensified regulatory controls on cryptographic exchanges.
The regulators strengthened the requirements for the approval of new traders and did not approve new trades this year after approving a total of 16 exchanges in 2017 and maintained another 16 applicants as quasi-traders. As a last count, only 3 of those questions are still standing after 12 have been withdrawn and 1 has been rejected.
In September, another exchange of Japanese cryptocurrencies, Zaif was violated. As you would expect, this incident does not make it easier for new trades to make the vote. But, the Coinbase executive is confident that the exchange is ready to overcome the obstacle.
The strict regulation, good for Coinbase, says Exec
Lempres said the FSA's rigorous approach is not an obstacle for his company, indeed it will be an advantage since the exchange also focuses on security. "The Japanese government is more focused on security … this is good for us," said Lempres.
He explained that Coinbase retained 99% of its cryptographic assets in cold portfolios, ie deposits that were not connected to the Internet. This means that most of its funds are out of reach of cyberattaccanti. The remaining 1 percent that Lempres claims is kept in hot wallets connected to the Internet for the convenience of users is assured.
A possible barrier
Lempres has indicated a possible barrier that Coinbase could face in its expansion in Japan. The main problem he said would arise if the FSA insists that Coinbase manages its systems in Japan. While this would allow the FSA to monitor transactions closely, Lempres said it would undermine the tight security it built in the US "We have everything built to protect our warehouse … in the US … It would be difficult for us to duplicate this what we do in the United States today in Japan and in other countries, "he explained.
The call of Japan
The FSA revealed that over 160 encryption operators were trying to enter the Japanese market despite the stringent requirements. He said he would hire more staff to cope with this load of applications while maintaining high standards.
As reported by Smartereum last month, one of the largest encryption exchanges, Huobi acquired from BitTrade an authorized exchange in Japan to enter the market. Likewise, Rakuten has acquired Everybody's Bitcoin, a Japanese cryptographic exchange to take advantage of its ongoing application process with the FSA, which was at an advanced level.
