Japan’s Financial Services Agency (FSA) Warns KuCoin, Bybit, and 3 Others for Operating Without Authorization

The FSA introduced Japan's first set of digital asset regulations in 2017, three years after Mt. Gox, the Tokyo-based bankrupt exchange

Japan’s Financial Services Agency (FSA) has reportedly sent warning letters to five offshore crypto exchanges it accuses of operating in the country without official authorization.

The FSA introduced Japan's first set of digital asset regulations in 2017, three years after Mt. Gox, the Tokyo-based bankrupt exchange that once handled over 70% of all Bitcoin transactions globally, confirmed losing 850,000 Bitcoins to a hack. In 2020, the FSA introduced new regulations requiring crypto exchanges to obtain operational licenses from the agency.

The FSA's Crackdown on Unregistered Exchanges

According to a local report, the FSA announced on Friday that it had issued warning letters to KuCoin, bitcastle LLC, Bybit Fintech Limited, MEXC Global, and Bitget Limited for operating crypto exchange businesses without proper authorization, in violation of Japan's Payment Services Act.

The Act requires digital asset exchange service providers to keep records, comply with anti-money laundering and counter-terrorist financing (AML/CFT) provisions, and take stringent measures to protect user funds.

The FSA's move to warn the five crypto exchanges implied that customers trading on the unregistered platforms may not access compensation under Japanese laws or enjoy protection from authorities in the event of trouble or unforeseen circumstances that may lead to business insolvency.

Today's development marked the second time the FSA has warned Bybit, MEXC Global, and Bitget Limited against operating in the country illegally. In April last year, the regulator instructed the three exchanges and BitForex to cease operations in Japan since they were not authorized to operate there. Bybit also received a similar warning from the FSA in 2021.