The Japan Financial Services Authority has issued 11 licenses to cryptocurrency exchanges operating on the Island. While announcing the list of operators, JSA officials added they would not be banning ICO. Japan is bucking the trend, unlike its Asian neighbors who are clamping down on exchanges and prohibiting ICOs. 17 other exchanges are in line to receive licenses from the regulator while 12 have wind down operations.
Exchange operators were invited to apply for licenses under the amended Payment Services Act. The JFSA revealed Quoine and BitFlyer had been awarded certificate number #00002 and #00003 following a six-month review process. The Certification sets minimum fiduciary expectations from licensees including periodic reports, statements of suspicious activity and transaction reports.
Japan's financial watchdog is keen to prevent the use of cryptocurrencies for money laundering. Officials said exchanges would be expected to know and identify their customers, separate customer accounts and put in place robust computer systems.
As part of compliance, Quione, a Singapore based company, will have to maintain an office in Tokyo. CEO Mike Kayamori said in a press release
Protection of customers' assets is of the highest priority to us. With our JFSA license, this is a positive market signal that we are here to build a trusted exchange, with proper compliance measures in place to prevent security breaches and provide more asset protection for our customers.
Quoine is running a month-long campaign on its platform as part of celebrating the milestone. Clients will enjoy zero transaction fees for all Bitcoin, Ethereum and Bitcoin Cash spot and margin trading through October.
Japan's move to embrace digital currencies sets the country apart from most developed countries. Japanese Yen Bitcoin trading volumes now make up close to 50% of cryptocurrency trading volumes by market share.
In April this year, the country officially recognized bitcoin and virtual currencies as a legal method of payment. Legislators passed the Payments Services Act into law by including virtual currencies as an amendment to the Banking Act. The number of exchanges operating in the country since has gone up to more than 30.
The collapse of Tokyo based Mt. Gox in 2014 dented the image of the Tokyo's cryptocurrency scene. Bankruptcy proceedings for 700,000 bitcoins lost to hackers and owed to creditors remain unresolved three years later. A $75 million lawsuit filed by Peter Vessenes against Mtgox is holding up the process of paying out 202,000 BTC to a trustee.
The JSA's regulatory framework is aimed at preventing a repeat of the Mt. Gox failure by fostering a sound market development.