San Francisco-based cryptocurrency exchange Coinbase aims to set a new security standard in Japan, and is more confident than ever that it will receive approval from Japan’s Financial Services Agency (FSA) to operate an exchange in the region.
Coinbase Optimistic About Expansion into Japanese Market
On June 4, the most valuable cryptocurrency exchange in the U.S., Coinbase, announced its plans to expand its offerings and services into the lucrative Japanese market. However, before Coinbase can operate in the region, it must first have its registration approved by Japan’s FSA.
In an interview published by Japanese financial newspaper Nikkei Asian Review, Mike Lempres, Coinbase’s chief policy officer, provided an update on the firm’s progress in dealing with the FSA, claiming that the discussions are “going well” and believes that the company will “certainly” receive approval “in 2019.”
Coinbase Welcomes Increased Scrutiny Under Japan’s Chief Regulator
“The Japanese government is more focused on security,” Lempres said, in reference to how the FSA has responded to a string of hacks that battered cryptocurrency exchanges in the region throughout 2018, leaving investors scores and the FSA scrambling to implement better security measures across the board.
The FSA increased its scrutiny over cryptocurrency exchanges operating in the country after Coincheck was hacked for nearly $500 million in cryptocurrency tokens. Since then, the FSA has issued a number of business improvement orders to exchanges, suspended others, and implemented a more stringent licensing process.
As of September, Reuters was reporting that over 160 registration applications were in the FSA’s review queue, forcing the country’s chief regulator to hire an additional 12 people for fiscal year 2019, in order to keep up with the growing demand.
Lempres said that the FSA’s greater focus on security is “good” for Coinbase and affords them an edge compared to their competition. He also expects Japan to bounce back from the recent hacks plaguing exchanges and investors.
“Japan has been an active large market from the very beginning, and has proved resilient as it bounces back from several bad experiences,” Lempres explained.
Coinbase to Set Security Standards in the Region
Coinbase hopes to become the pillar of security and safety in Japan. As part of Coinbase’s discussions with the FSA, the firm boasts of its security standards put in place to protect investors.
Lempres claims that Coinbase has “dozens” of employees dedicated to security, and that only 1% of assets are stored in fully insured hot wallets, the remaining 99% of funds are stored offline using a unique and complicated process.
Lempress believes there is a “great demand” for trusted service providers in Japan, and hopes that Coinbase will satiate that need after the FSA approves its application.
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