By
Temitope Olatunji
April 18th, 2024
The famed U.S.-based cryptocurrency exchange is seeking a legal approval for its services from Japanese authorities praising relatively hush industry oversight for highly secure business environment.
It is known that Japan was amidst the first countries to recognize an advent of the Fourth Industrial Revolution helmiting by a pervasive applicability of the blockchain technology. As a result the country has also been pioneering to face the first real outcome of a cryptocurrency hype fueled by investors’ insatiable lust for quick cash. At that point, the line of Japanese relationship with digital assets started resembling a roller-coaster.
Originally blockchain-friendly Japan has toughened its stance on cryptocurrency once Coincheck and Zaif has written their names into the history of major cryptocurrency heists incidentally shattering the ground of Japanese economy.
The financial authorities in charge of a steady development of Japanese economy decided to increase a direct supervision over the cryptocurrency exchanges already operating in the country while the newcomers has been halted with meticulous registration procedures required for an exchange to be considered as a legal entity.
However, the U.S.-based cryptocurrency giant Coinbase does not seem to shy away from a strict regulatory framework forced by Japanese financial watchdogs since the world-known exchange has announced intentions to expand to Japanese market. Notably the company comments on such decision citing the mentioned long-lasting relationship with cryptocurrency as a huge advantage that has contributed to an elaboration of the industry resilience towards market collapses.
According to the chief policy officer of Coinbase, Mike Lempres, the process of getting a license is going well with the Financial Services Agency (FSA) and the company expects to receive an operating license in Japan next year. Lempres once again stressed that Coinbase is not afraid of trenchant regulatory scrutiny regarding cryptocurrency exchanges and is willing to operate in such a highly secure business environment .
This is not come as a complete surprise as Coinbase is known to be one of the most overprotective cryptocurrency exchanges that is currently running at the market. Being founded back in 2012, today Coinbase holds over 20 million accounts and its revenue has reportedly exceeded $1 billion last year. It is worth to mention that almost 99% of the company’s funds are stored of the offline cold wallets that are not connected to the internet, making a significant cyber-attack far less likely.
In June, the company announced it would like to enter Japan and appointed a managing director. Yet there are still issues under discussion for regulatory approval. For Coinbase one of the key questions is whether the FSA will require the exchange’s system to be managed in Japan. Though this will improve FSA’s ability to monitor, Coinbase has to face additional security risks as Lempres says:
“We have everything built to protect our storage… in the U.S. We won’t do anything to even raise 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.”
The FSA declined to grant an approval for registration of new cryptocurrency exchange since December 2017. Until now there is a line of 160 applications from various cryptocurrency exchanges awaiting for a decision. Nevertheless, such a prominent industry player as Coinbase has all the chances to become an exquisite exception.