Regulation
Gate.io Exits Japan, Likely Due to Regulatory Pressure
Gate.io cryptocurrency exchange is leaving the Japanese marketaccording to an announcement on Gate.io’s blog. New account creation for Japanese residents had already been suspended on July 23. The exchange said it would soon provide details on the full timeline of the suspension.
The Mt. Gox hack made Japan one of the first countries to adopt strict regulations on cryptocurrency exchanges, but there has been some progress in the regulatory approach in recent years.
At the same time, the platform will undertake necessary changes to comply with Japanese laws, including removing Japanese-language text. However, essential information will still be provided in Japanese during the support period to ease the transition for Japanese-speaking investors.
More regulation everywhere
The reason behind Gate.io’s exodus remains unclear. In its official statement, the exchange said it was committed to complying with regulations and regretted having to exit the Japanese market.
“As one of the world’s leading cryptocurrency exchanges, we are committed to complying with financial regulations in all regions where we operate,” Gate.io said.
While Gate.io claims to be committed to regulation, it is not registered with the Financial Services Agency (FSA) of Japan. Previous warnings from the FSA against other exchanges could be a possible reason for their exit.
The Financial Services Agency (FSA) has issued warning letters to four cryptocurrency exchanges for operating in Japan without proper registration. These include Bybit, MEXC Global, Bitforex and Bitget.
According to the Japanese financial regulator, these exchanges have violated the country’s fund liquidation laws. The regulator clarified that the current list of unregistered traders may not accurately represent the full scope of unregistered activity.
Exchanges that fail to comply with FSA regulations could face fines and legal action. Bybit, a major cryptocurrency exchange, has yet to issue an official statement on the FSA warning.
Gate.io is a cryptocurrency exchange founded in late 2017, under the aegis of Gate Technology. The exchange is certainly not the first and may not be the last to exit a growing market. Binance has also abandoned or limited its services in several countries, including the United Kingdom, Germany, and Japan, due to regulatory pressure.
Japan has strict consumer protection laws for cryptocurrency exchanges, likely in the wake of the Mt. Gox hack. After the collapse of Mt. Gox in 2014, the government established strict guidelines for cryptocurrency operators, which contributed to a stable regulatory environment.
Mt. Gox Money in the Market
After a decade, Mt. Gox hack victims have finally started receiving refunds. The exchange trustee announced the start of the redemption process earlier this month.
While Japanese authorities are taking steps to ensure adequate supervision and mitigate risks associated with cryptocurrency-related operations, such as fraud, money laundering, and market manipulation, they are also working to integrate digital assets into their financial system.
The Japanese government is moving closer to allowing venture capital firms and other investment funds to directly hold digital assets.
Prime Minister Fumio Kishida’s administration has been pushing for legislative changes to allow investment limited partnerships to acquire and hold cryptocurrencies, Bloomberg reports.
The proposal is part of a broader economic reform bill aimed at promoting the creation of new businesses and strategic national investments through tax incentives and financial support.
Major Japanese companies, including Softbank and Sony, are actively entering the Web3 space through strategic investments and partnerships. In addition, Metaplanet, a public company often referred to as “Asia’s Microstrategy,” has also increased its Bitcoin holdings, with steady purchases since the beginning of this year.
Meanwhile, the rise of non-fungible tokens (NFTs) has also gained traction in Japan, with regulatory guidelines clarifying their status. NFTs are not classified as securities under current law unless they confer profit-sharing rights to their holders, allowing for a more flexible approach to digital art and collectibles.