Coinbase On Track for Government Approval in Japan
by: Samantha Joule Fow
In today’s blockchain currency market, Japan is known as a pro-crypto marketplace. However, this does not mean they have taken a light-handed approach to market regulation across the board. In fact, Japan has some of the most inflexible and stringent rules on digital coin exchanges of any nation that regulates altcoin trading. This has proven to be a particular challenge to cryptocurrency exchanges that hope to operate in Japanese markets.
Japan’s Sophisticated Crypto Rules
Even with stiff regulations in place, Japan is a crypto hub. It’s home to one of the world’s largest markets for blockchain tech and digital coins. Japan leads the world in the use of cryptocurrencies for retail payments, and Bitcoin enjoys status in the nation that puts it nearly on par with fiat currency. But with great freedom comes great responsibility, and Japanese regulators have chosen to place this burden squarely on the shoulders of companies hosting cryptocurrency trading platforms.
Currently, there are 16 registered blockchain currency exchanges operating in Japan – and if top crypto exchange Coinbase has its way, there will soon be one more. However, this may prove easier said than done. Japanese regulators’ main concern is the security of the digital coin exchanges that serve the country’s citizens. In fact, the nation has become even more restrictive following recent hacks of popular exchanges Coincheck and Zaif, which caused Japanese investors to lose tens of millions of dollars. These losses have attracted the watchful eye of Japan’s Financial Service Agency (“FSA”), which has not approved any crypto exchange licenses since December 2017.
Coinbase Seeks to Expand Asian Presence
In June 2018, Coinbase announced its intention to expand operations to the Japanese blockchain currency market. The company has established an office in Japan, but before they can start hosting trades they have to earn government approval. This includes a license to operate as a cryptocurrency exchange from the FSA.
Coinbase’s decision to start operations in Japan came just after the company opened its first permanent office in New York. Most industry experts are optimistic that the FSA will grant the U.S.-based exchange a license to operate. But this is not to say that Japanese financial regulators are champing at the bit to license another digital currency exchange – far from it.
The FSA’s strict and demanding stance on digital currency exchanges would cause just about any cryptocurrency trading platform a few headaches, but it may actually work in Coinbase’s favor. Coinbase has been the poster child for regulatory compliance in the U.S. cryptocurrency market for years. The exchange also has robust security, and nearly all of the assets traded on Coinbase are kept in cold storage. Only about 1% of investor’s funds are stored in insured internet-connected “hot wallets,” which Coinbase maintains for trader convenience.
Up-And-Coming Exchanges Break New Ground
Coinbase may be one of the first movers in the crypto exchange market, but blockchain and cryptocurrency are industries of innovation. As secure as its current operations may be, Coinbase may soon age out of the regulated crypto exchange market that helped the company break out in the first place. This is largely a result of new technological innovations that other exchanges are embracing, which are making them faster and more secure than ever before possible. For example, Halo Platform offers a decentralized and soon a centralized exchange. The centralized exchange is high-speed and multi-functional, making it particularly well-suited for quick and easy volume transactions. The decentralized exchange site, HaloDEX, operates trustlessly and without a central settlement party. Decentralizing trades like this can make for huge gains in speed, efficiency, and security, so anyone looking for the next up-and-coming altcoin trading platform may want to check them out.
To learn more about the differences between a centralized and decentralized exchange, digital coin investors can access the Halo Platform community at any one of the social platforms listed below.