Japan's FSA warns five crypto exchanges for operating without mandatory registration.
Unregistered exchanges lack asset segregation and expose users to financial risks.
The warning aligns with Japan's push to tighten crypto regulations for user protection.
Japan’s Financial Services Agency (FSA) has issued warnings to five cryptocurrency exchanges for operating without proper registration in the country. The platforms flagged include Bybit Fintech Limited, KuCoin, MEXC Global, Bitget Limited, and Bitcastle LLC.
Operating without registration is a serious breach under Japanese law, which mandates that all cryptocurrency trading platforms obtain regulatory approval. The FSA’s warning highlighted the risks associated with these unregistered exchanges, emphasizing their lack of oversight and safeguards.
The FSA further stated that unregistered platforms do not adhere to compliance standards designed to secure user funds. This creates vulnerabilities, exposing users to financial risks in the event of operational failures or security breaches.
Additionally, customers of these platforms are not covered by the legal protections guaranteed under Japanese law, making it difficult for them to seek compensation in disputes or cases of insolvency.
Under Japan’s regulatory framework, crypto exchanges must meet strict requirements, including implementing robust asset management measures and maintaining transparency in their operations.
These measures aim to protect users and ensure market stability. Unregistered exchanges bypass these rules, undermining the regulatory system and putting users at risk.
This move by Japan’s FSA reflects the government’s commitment to strengthening the regulatory environment for cryptocurrency and digital assets. The warning also aligns with Japan’s broader strategy to enhance its leadership in the Web3 and cryptocurrency sectors.
In recent months, the government has restructured its Web3 leadership to provide clearer guidance for the industry while supporting innovation within a secure regulatory framework.
As global regulators intensify scrutiny of cryptocurrency operations, the FSA’s actions signal a firm stance on upholding consumer protections and ensuring compliance. Japan’s efforts to create a safe and regulated crypto market come as countries like the United Kingdom and Singapore also work toward comprehensive crypto regulations.