Japan’s financial watchdog, the Financial Service Agency (FSA), may issue its first registration denial to a domestic cryptocurrency trading platform, Coindesk has reported, citing information from a local media outlet.
According to a report, published in the Nikkei newspaper on Tuesday, the FSA may refuse to register a trading platform called FSHO, due to its previous failures to comply with existing Japanese financial rules.
FSHO was among the first batch of crypto exchanges penalised by the FSA after the regulator adopted a tougher stance on the regulation of cryptocurrency trading. The watchdog issued a one-month suspension order to the platform in early March and another on in April.
Explaining is reason for issuing the suspensions, the FSA said at the time that FSHO had failed to implement the required know-your-customer procedures and subsequently failed to report suspicious transactions possibly indicating money laundering. The platform’s current suspension expires on June 7.
“The Financial Services Agency will clarify its attitude towards rebuilding a healthy trading environment by denying a sloppy dealer," Nikkei said in its report, as quoted by Coindesk.
Japanese regulators have stepped up their efforts to regulate the market following a major hacking attack in late January, in which more than $500 million worth of NEM tokens were stolen from crypto exchange Coincheck. In addition to the suspensions, the FSA also ordered a number of trading platforms to raise their business standards.
If FSHO’s registration application is denied, this would mean that the crypto exchange would have to permanently shut down its operations. Under Japanese low, domestic crypto trading platforms must be registered with the FSA in order to continue their operations. The FSA recently revealed that following the Coincheck hack, eight platforms had indicated that they would withdraw their applications. However, the watchdog added that about 100 firms were looking to enter the market.