The Financial Services Agency in Japan has not approved any virtual currency licenses since December, shortly before the Tokyo-based cryptocurrency exchange Coincheck was hacked in January.
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| Coinbase's chief policy officer said despite Japan's regulatory scrutiny on cryptocurrency exchanges, it was certain to get registration in 2019. Here, the picture taken shows a person holding a visual representation of the digital cryptocurrency Bitcoin, at the 'Bitcoin Change' shop in Tel Aviv, Israel, Feb. 6, 2018. Photo: JACK GUEZ/AFP/Getty Images |
By Ranjitha Shastry, International Business Times
Cryptocurrency exchange Coinbase's chief policy officer said in an interview Wednesday the enhanced scrutiny of cryptocurrency exchanges by the Financial Services Agency (FSA) in Japan was actually a good thing for the company because it meant Coinbase could get a stronger foothold in the market.
Speaking with Nikkei Asian Review, Mike Lempres of Coinbase said: "The Japanese government is more focused on security. That is good for us. Discussions with the FSA are going well. We are… committed to getting it done. It will certainly be in 2019.”
On June 4, Coinbase published plans to expand its offerings and services into the Japanese market. Dan Romero, vice president of Coinbase Consumer, announced in a blog post about the launch of the office: "We plan to take a deliberate approach to our rollout in Japan, which means working hand-in-hand with the Japanese FSA to ensure compliance with local laws at every stage."
However, before Coinbase can operate in Japan, it must first have the registration approved by FSA. And the agency has not approved a single virtual currency license since December 2017, shortly before the Tokyo-based cryptocurrency exchange Coincheck was hacked in January and tokens worth $530 million stolen. In September, trading platform Zaif — also based out of Japan — lost up to $60 million worth of cryptocurrencies in another hack.
Lempres said in the interview these hacks would increase the chances of regulators considering Coinbase, which has a trustworthy track record.
"Japan has been an active large market from the very beginning, and has proved resilient as it bounces back from several bad experiences," Lempres said. "We think there is great demand for a trusted provider of services here."
Lempres told the publication that Coinbase "dedicates" a significant number of resources to safeguard investors’ investments, and that of its 550 ir so employees, "dozens" were dedicated to asset security.
“We have everything built to protect our storage… in the U.S. We won’t do anything to even raise the possibility of a hack. It would be hard for us to duplicate what we do in the U.S. today in Japan and other countries," Lempres added. Coinbase keeps 99 percent of the funds offline and only 1 percent is held in hot wallets — accounts that are connected to the internet. That 1 percent is fully insured, according to Lempres. Coinbase’s security system is managed in the U.S., which could be a problem if FSA says it requires Coinbase Japan to store its assets locally.
Copinbase recently announced a process which could lessen the time taken to list new digital assets already in compliance with local laws. It was also noted last week that the cryptocurrency exchange is in talks to raise $500 million.
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