Japan’s regulator The Financial Services Agency (FSA) has approved 11 companies to operate cryptocurrency exchanges in the country. This is in stark contrast to neighbouring countries China and South Korea, who are intensified efforts to ban ICO’s and the trade in digital currencies.
Exchanges have been allowed to operate in Japan without a license up until now but regulating the industry will aid in the fight to combat fraud, while still keeping innovation alive.
FSA officials say: “With the new regulation, Tokyo aims to balance the need to protect investors with the need to support fintech innovations.” To obtain a license, companies have to comply with a several strict regulatory requirements, including segregation of customer accounts and building strong computer systems.
Industry experts believe that this move will further strengthen Japan’s position as the top Bitcoin trading hub, along with the government’s recognition of Bitcoin as official legal tender back in April this year.
The latest move comes in an effort to avoid another Mt.Gox scandal. The Tokyo based Bitcoin exchange was the biggest in the world until $480 mln went missing and founder Mark Karpeles decided to cease operations back in 2014. He stood on trial for embezzlement and data manipulation.
The FSA said it is reviewing a further 17 license applications from hopeful exchange operators seeking approval.