The Japanese financial regulator the Financial Services Agency (FSA) has granted a license to cryptocurrency exchange Coincheck allowing them to continue operating in the country.
In an official communication, the FSA pinpointed the elements of risk associated with digital assets. They stated that cryptocurrencies are not “legal currencies where countries guarantee value like the Japanese Yen or US Dollar,” but are simply “electronic data exchanged on the internet.”
Coincheck was in the news for all of the wrong reasons in 2018, suffering a hack that saw $500 million stolen, prompting concerns from the FSA.
However, the exchange reacted commendably, reopening trading and refunding customers throughout the course of last year.
With the “full permission” of the FSA, Coincheck is now well placed to become one of the most reputable exchanges in Japan, and it currently facilitates around $15 million in daily trade volume.
Breaking News: Japanese exchange Coincheck is approved as a registered exchange by FSA. Coincheck lost $500M worth of cryptocurrency due to hacking in Jan 2018.
— Yoriko Beal (@yoriko09) January 11, 2019
The decision to grant a license will be seen as a huge boost to online broker Monex Group, who bought Coincheck for $33.5 million last April.
However, in spite of granting the exchange its license, the FSA has remained cautious on cryptocurrencies in general. Japan has abandoned plans to launch derivatives markets including Bitcoin futures, instead looking at the possibility of an ETF, which could combat the ongoing issue of price manipulation.
Wash trading, spoofing, and other manipulative techniques are commonly used to affect price in the cryptocurrency markets, and as a result the regulator issued a few warnings about trading the asset.
The statement continued: “Virtual currency price may fluctuate. The price of the virtual currency may plummet, suddenly becoming worthless. There is a possibility of losing.”
“Consultations on virtual currencies and fraudulent coins are on the rise. Please pay attention to fraud and malicious commercial law which uses virtual currency or piggybacks on the introduction of a virtual currency exchange industry.”
Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.