Users of 5 Exchanges May Be Lacking Asset Protection
The Financial Services Agency (FSA), Japan’s financial regulator, announced on November 29 that it has sent warning letters to five cryptocurrency exchanges that it accuses of operating without a license.
Those five cryptocurrency exchanges are Bitcastle LLC, Bitget Limited, Bybit Fintech Limited, Kucoin, and MEXC Global.
According to a report by Coinpost, cryptocurrency exchanges targeting Japanese residents must register with the FSA or a financial authority.
This regulatory agency stated that it cannot monitor unregistered cryptocurrency trading platforms and therefore cannot verify whether they properly segregate customer assets.
The FSA stated that this lack of oversight could leave authorities unable to assist users harmed in the event of disputes or force majeure cases.
This regulatory agency also warns that residents of Japan using these unregistered exchanges may not be eligible for asset protection or compensation under Japanese law.
By sending warning letters, Japanese regulators have joined their French and Hong Kong counterparts, who have also targeted unlicensed cryptocurrency trading platforms.
The French regulator has gone further, urging residents to take precautions when trading with such platforms.
In Hong Kong, the Securities and Futures Commission has threatened legal action against entities operating illegally in the region.
The FSA's warning comes as Japan seeks to assert itself as a leading nation in the Web3 space.
For example, Yuichiro Tamaki, the leader of the People's Democratic Party, has supported tax and regulatory reforms for cryptocurrency assets in media reports.
Tamaki's party has proposed a separate 20% tax on cryptocurrency assets.
As of the time of writing, none of the five exchanges have issued statements regarding the FSA's warning letters.
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