Japan Watchdog to Beef Up Crypto License Review
Japan’s Financial Services Agency (FSA) is bolstering its review for applications to secure a cryptocurrency exchange license by expanding its team dealing with crypto-related activities in the country next year.
The Japanese regulator is planning to hire 12 more people in 2019 to better respond to the growth of the country’s cryptocurrency exchange indsutry, Kiyotaka Sasaki, vice commissioner for policy coordination at the FSA, said, as reported by Reuters.
At present, the FSA has about 30 people tasked to oversee crypto-related businesses in Japan including license registration reviews.
Documents revealed that more that 160 companies including public firms are planning to submit applications to obtain an exchange license. The FSA has been reviewing 16 cases as of writing, but 12 of them withdrew their applications after the agency told them to do.
Three others were awaiting a final decision, while the other one was already rejected.
Sasaki revealed these details during the fifth study group meeting on cryptocurrency this week which was attended by platforms, scholars, lawyers, and government officials.
“The biggest problem is how to deal with new suppliers,” the report said, quoting the FSA.
FSA is not the only entity contending with a shortage of personnel working in the crypto arena, it has been revealed.
“Many exchanges are managing large amounts of user assets with a small team (3.3 billion yen [around $30 million] per employee on average),” the FSA said in a summary.
Figures show that while the total amount of assets held by Japanese crypto bourses have soared by 553 percent over the past year (valued at $6.2 billion), more than 75 percent of them have a team composed of less than 20 employees.
In April, the FSA revealed the annual trading volume of the actual bitcoin cryptocurrency has risen to $97 billion last year from $22 million in 2014. Trading on margins, credit and futures of bitcoin as an underlying asset has increased to $543 billion in 2017 alone from $2 million in 2014.
As of March this year, Japan handled at least 3.5 million individuals who trade digital currencies as actual assets. Among them, crypto investors in their 20s, 30s and 40s make up a major share which account for 28 percent, 34 percent, and 22 percent, respectively.
The number of traders investing in cryptocurrency margins and futures hit 142,842 as of end-March.
Releasing the data is part of the FSA’s efforts to bring greater transparency to the crypto industry following a hacking incident which hit Coincheck this year. This is the first step towards achieving a more thorough examination over institutional issued in Japan’s crypto sector.
It can be recalled that Coincheck confirmed it lost 58 billion yen or $553 million following what it appears to be the largest hack in the crypto history. About 500 NEM tokens were stolen from the startup’s digital wallets.
Coincheck since then restricted deposits, as well as suspended trading and withdrawal of XEM, the token running on the NEM blockchain.