Bybit, 3 others flagged in Japan over alleged unlicensed digital currency exchange operations

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Japan’s Financial Services Agency (FSA) has issued a warning to foreign digital asset exchanges operating in the country without proper registration, noting that the firms are in breach of fund settlement laws.

The FSA’s warning was contained in a disclosure where it named Bybit, BitForex, MEXC Global, and Bitget as entities “conducting crypto asset exchange business without registration.” The disclosure also mentioned other firms engaged in other unlicensed activities, such as digital asset lending and custodial services.

This is not the first time Bybit is coming under the FSA’s crosshairs, as both entities were at loggerheads over its operations without necessary permissions. Meanwhile, a Bitget spokesperson disclosed that the firm would be reaching out to the FSA for clarification over the warning.

“Bitget operates through BG Limited, a Seychelles-registered company. As a global crypto exchange, we are following the rules and regulations in Seychelles,” said the representative. “All our operations and services remain normal at the moment, and we will update our customers when there is an update.”

The FSA’s latest move has been construed as proof that Japan is tightening the screws on its nascent digital currency ecosystem. Already, the country is working on several new regulations to govern the industry as it plans to improve its digital economy.

“While many other countries are standing still and shrugging their shoulders in the face of the cold wind, Japan is positioned to play a unique role in the crypto industry,” said a paper by the Liberal Democratic Party Web3 arm.

Japanese regulators announced plans to ease the restrictions on foreign-issued stablecoins provided they are in line with local requirements as part of plans to attract investment in the sector. In December 2022, the government agreed to exempt digital currency firms from unrealized capital gain taxes.

Foreign exchanges are having a hard time in Japan

Foreign digital currency exchanges are having a turbulent time in Japan, marked by a series of high-profile exits. U.S.-based Coinbase (NASDAQ: COIN) caused a stir after it announced that it was halting operations in Japan due to unfavorable market conditions.

Shortly after Binance returned to Japan, the exchange revealed that it would temporarily halt registering new users “to comply with local regulations.”

Another U.S.-based exchange Kraken announced its exit from Japan after failing to secure a healthy market share, saying that it will be canceling its registration from the FSA.

Watch: The Future of Digital Asset Exchanges & Investment