Recently, Japan stepped up its crackdown on non-compliant crypto exchanges unlike in the US. In an unprecedented move, Japan’s top financial agency took steps to block their crypto apps in the country.
On Friday, February 7, Nikkei reported that Japan’s Financial Services Agency (FSA) ordered Apple and Google to remove five crypto apps from their stores. The apps belong to the crypto exchanges Bybit, MEXC Global, LBank Exchange, KuCoin, and Bitget.
Enforcement action against exchanges that failed to register with the FSA occurred last week. However, Apple already complied with the request, removing all five apps from its App Store on February 6.
Apple stated that they warned the companies not to operate in Japan, but they didn’t comply.
This was the first time Japan’s FSA took similar action by directly blocking crypto apps, which came after several warnings. The companies previously appeared on the list of virtual exchanges that operate in Japan without a license.
Why Japan is Cracking Down on Crypto Exchanges
The FSA requires that all crypto exchanges register with the agency to operate in Japan legally. The registration aims to ensure compliance with international regulations and a degree of investor protection. Moreover, in 2023, Japan introduced stricter anti-money laundering rules for crypto exchanges.
Earlier, the Japanese FSA criticized Binance, the largest crypto exchange in the world. In response, in 2022, the exchange acquired the Sakura Exchange BitCoin to enter the Japanese market.
Japan’s strict regulatory framework is partially due to major crises in the past. Notably, it stemmed from the collapse of Mt. Gox in 2014. The Tokyo-based company was once the largest Bitcoin exchange in the world. However, it collapsed after hackers stole as much as 850,000 BTC.
The Mt Gox incident prompted Japan to enact stringent measures to protect investors. In this context, the latest enforcement action against five non-compliant exchanges is interpreted.
For instance, blockchain expert Anndy Lian explained that this move does not target retail investors. Instead, he suggested that authorities are enforcing the rules that protect smaller investors.
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