Japan Targets Unregistered Crypto Exchanges in Latest Regulatory Crackdown

Japan's Financial Services Agency (FSA) is cracking down on several overseas cryptocurrency exchanges, accusing them of operating illegally within the country.

Among the exchanges named are KuCoin, Bybit, MEXC Global, Bitget, and Bitcastle. The FSA claims these platforms are offering services to Japanese residents without the required registration, violating local cryptocurrency laws.

This regulatory move highlights the potential dangers of using unregistered crypto exchanges. Without proper authorization, these platforms bypass the stringent protections that registered exchanges must follow under Japanese law.

This creates risks for users, who could face issues such as the mixing of customer funds with operational assets and lack of safeguards in case of problems like insolvency or security breaches. Additionally, users of unregistered exchanges are not entitled to the legal protections provided by Japan’s financial regulations, leaving them exposed to possible financial losses.

In Japan, any cryptocurrency exchange offering services within the country must register with the FSA or a local financial authority to comply with the law. This ensures the platform follows necessary consumer protection measures, such as asset segregation and transparent operations. The FSA’s warnings serve as a reminder for users to be vigilant about the platforms they use and to check for registration before engaging in any trading activities.

This crackdown is part of a broader effort by Japan to establish a clearer regulatory framework for the crypto and Web3 sectors. Recently, the Japanese government has restructured its Web3 leadership in an attempt to better balance regulation with innovation in the digital asset space. As the country seeks to bolster its position in the global crypto market, strong regulations are seen as crucial for maintaining consumer trust and ensuring market stability.