Japan's Financial Services Agency (FSA) has issued operating licenses to 11 Bitcoin (EXANTE: Bitcoin) exchanges, Reuters reports.
The licensing enforces certain operational requirements for the exchanges, including high standards for cybersecurity, the segregation of customer accounts and the verification of customer identities.
With the new regulation, Tokyo aims to balance the need to protect investors with the need to support fintech innovations, FSA officials said.
Japan is uniquely proactive in its cryptocurrency regulations. And the move by Japanese authorities is helping the country cement its place as a driving force for Bitcoin and become one of the global leaders of the cryptocurrency market.
Japan’s largest Bitcoin exchange bitFlyer Inc. welcomed the decision and said in a statement: “Japan has been exploding with demand for both Bitcoin trading as well as virtual currency services. The FSA’s approval for bitFlyer to operate as a Registered Virtual Currency Exchange, and the agency’s openness and forward thinking regulation could not come at a better time for the Blockchain space.”
Japan’s decision to license Bitcoin exchanges comes at a time its neighbors — China and South Korea have moved in the opposite direction, restricting and in some cases outright banning the use of cryptocurrencies.
The news comes as part of the government’s ruling to bring cryptocurrency trading under supervision following its decision to legalize Bitcoin as a legal payment method in April.
The move was aimed at avoiding a repeat of the failure in 2014 of Tokyo-based Mt Gox, the world's largest Bitcoin exchange at the time, which led to the loss of millions of dollars in customer funds.