The Cayman-based crypto exchange Gate.io has announced plans to wind down operations in Japan due to regulatory pressure.
The renowned centralized crypto exchange Gate.io has confirmed plans to exit the Japanese market. In a July 22 announcement, Gate.io will prioritize complying with the crypto regulation for crypto assets in Japan.
The crypto exchange stated that the winding down process will be undertaken in phases. Firstly Gate.io has suspended the creation of new accounts and registration for Japanese users.
Gate.io Sunset Operation in Japan
The crypto exchange will commence the process of terminating its product offering in Japan in the coming weeks. In the blog post, Gate.io regretted leaving the vibrant Japanese crypto industry and pledged to resume operation after complying with the regulatory requirements.
The embattled crypto exchange plans to comply with the requirements of the Japanese financial service agency. Gate.io ranks among the largest crypto exchanges by trading volume. CoinGecko report shows that the Gate.io trading volume reached $2.34 billion.
Having gained a sustainable market position in Japan the crypto exchange plans to assist the affected customers to migrate to compliant crypto firms. Gate.io has advised customers to move their assets to regulated crypto exchanges in Japan.
A review of the Gate.io website demonstrates that the crypto exchange has removed the Japanese language from its platform. The crypto exchange will provide further details concerning the winding down process.
Gate.io Urges Japanese Customers to Transfer Funds to Other Exchanges
However, Gate.io has promised to keep the customers up-to-date with the ongoing shutting-down process. In the announcement, Gate.io will comply with the Japanese financial regulators’ requirement when sunsetting its operations.
With the growing popularity of crypto assets, Japanese financial regulators have been exploring ways to strengthen customer protection. The FSA enforcement action on the crypto industry aims at restoring market integrity.
Despite the effort to restore regulatory sanity in the digital sector, the FSA has been forced to revise the existing law on digital assets. In a recent publication, the Japanese financial regulators amended the Payment Service Act and the Financial Instrument and Exchange Act to clearly define the rules for issuing virtual assets.
Under the new rule, the virtual assets service providers (VASPs) were demanded to implement adequate security measures and conduct regular audits. Later in 2021, the FSA introduced tougher licensing requirements to address unfair business practices.
The VASPs were required to implement adequate security measures and provide the company’s financial position to the relevant authority. The local and foreign VASPs must comply with the international standard of money laundering to operate in the Japanese crypto market.
Suitability of Japan Crypto Market
The new legislation allows crypto firms to report suspicious activities. Recently the Japanese financial regulators announced plans to start policing fiat-backed token stablecoin.
The regulators introduced new legislation for stablecoin demanding the VASPs to maintain their reserve equivalent to the value of the token in supply. The stablecoin issuers were instructed to conduct regular audits to enhance transparency and stability.
In February the Japanese government approved the economic reform bill allowing the Investment Limited partnership to engage in the buying and selling of crypto assets. The economic reform bill was initially proposed in September 2023 aiming at promoting business growth by offering financial support and tax incentives to businesses.
Editorial credit: Sergei Elagin / Shutterstock.com
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