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(Kitco News) - The global crypto clampdown continues to unfold as Japan has become the latest country to take action against its growing cryptocurrency industry by issuing warning letters to several foreign crypto exchanges informing them that they have been operating in the country without the proper registration.
On Friday, Japan’s financial regulator, the Financial Service Agency (FSA), sent letters to multiple exchanges – including Binance, MEXC Global, Bybit, Bitforex and Bitget – warning them that their operations are violating the nation’s fund settlement regulations by facilitating the exchange of crypto assets without first completing the registration process.
The regulator also said the five exchanges are not the only firms that are non-compliant, and their action “does not necessarily indicate the current state of unregistered business.”
The regulations in question were first introduced in 2020 and require all cryptocurrency exchanges to register with the agency and obtain a license in order to operate in Japan.
Thus far, Japan has not been as heavy-handed as some other countries when it comes to regulating its crypto industry, but that appears to be changing amid a global push by governments around the world to limit illicit cryptocurrency use and establish a clear regulatory framework for individuals and companies.
For example, the FSA issued its first formal warning letter to Binance and Bybit for operating without the necessary permissions back in 2021, but the exchanges have yet to see any serious consequences for continuing to operate.
The warning from Japan is just the latest in a growing list of Binance’s woes after authorities in the U.S. sued the exchange and its founder Changpeng “CZ” Zhao for violating U.S. securities laws.
All exchanges that do not comply with the FSA’s regulations and continue to operate without the proper registrations face fines and legal action. This warning highlights the steadily increasing regulator scrutiny that crypto exchanges and companies face in Japan and around the world.
Concerns of illegal activities such as money laundering, fraud, tax evasion and market manipulation have risen amid a growing global banking crisis, and regulators are working to plug any capital outflow loopholes and put a halt to other illicit activities.
While many exchanges have chosen to work with regulators in an effort to continue providing services in certain jurisdictions, others have opted to close up shop and focus on more welcoming governments. Both Coinbase and Kraken, two of the largest exchanges in the U.S., have closed their operations in Japan due to challenging market conditions and the need to cut expenses and refocus their efforts.
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On Friday, the cryptocurrency exchange Bittrex announced that it would be exiting the U.S. market after nine years of operation as “it’s just not economically viable for [them] to continue to operate in the current U.S. regulatory and economic environment.”
After discussing the nine-year journey, Richie Lai, the CEO and co-founder of Bittrex, said “Regulatory requirements are often unclear and enforced without appropriate discussion or input, resulting in an uneven competitive landscape… Operating in the U.S. is no longer feasible and Bill, Rami and I will focus on helping Bittrex Global succeed outside the U.S.”
The withdrawal of Bittrex from the U.S. market follows the country’s crackdown on crypto banking providers in the wake of the collapse of Silvergate Bank, Silicon Valley Bank and Signature Bank.
