After the recent G20 in Japan, which had crypto and blockchain as one of the topics that were discussed, the FSA (Financial Services Agency) revealed that 110 exchanges had applied for a license to operate in Japan.
The waiting list also includes LINE Corporation, the company behind the messaging app of the same name, which is almost close to licensing its BITBOX exchange, currently operating in several countries around the world with the exception of the US and Japan.
Moreover, having been one of the first countries in the world to help crypto exchanges, although it has recently stopped because of the events mentioned above, Japan boasts of a very large user base and is second only to that of the US in terms of volumes on various exchanges around the world.
The FSA and exchanges in Japan
In April 2019, the FSA licensed two crypto exchanges out of 23 new candidates, namely Rakuten Wallet Co. Ltd. and DeCurret Co. Ltd.
When looking at how the crypto exchange situation in Japan has evolved in the past, only 16 were approved in 2017. However, after the Coincheck disaster and the hack involving millions of NEM, the authorities had introduced new legislation allowing for on-site inspection of crypto exchanges and, with this new legislation, only 3 exchanges were able to obtain a license.
In addition, the FSA has imposed the use of cold wallets which are not connected in real-time to the network, even though, as the FSA itself has pointed out, a cold wallet alone cannot be a sufficient security measure to avoid other types of breaches. As a result, in addition to requiring the adoption of cold wallets, the FSA is now also analysing the internal security measures in place to protect the data managed by the employees of the exchange.