Crypto exchange candidates undergo lengthy review process in Japan

The Japanese financial watchdog’s review process of companies applying for a crypto exchange licence takes nearly six months, according to a recent report from industry website Cointelegraph.

Under Japanese law, in order to operate in the country, crypto exchanges must be registered with the Financial Services Agency (FSA). To win the regulator’s approval, however, the companies need to undergo a lengthy review process, Cointelegraph Japan reported last week.

The process begins with the company that applies for the licence submitting answers to over 400 questions. After receiving the answers, the FSA communicates with the company to verify its business plan, governance, cybersecurity, management system, and anti-money laundering (AML) and counter-terrorist financing. FSA officers personally verify the company’s practices.

This review phase of the process takes about four months, Cointelegraph notes. Then, the company submits their crypto exchange licence application to the FSA. The agency then decides whether to approve or reject the application within two months.

The watchdog has reportedly declared that there are 21 companies currently undergoing the first part of the process and seven that are in the approval phase. This means that in two months there could be up to seven new crypto exchanges operating in Japan.

Notably, among the companies that have completed the process is now Coincheck, the Tokyo-based crypto exchange that suffered a $530-million hack nearly a year ago. Last week, Coincheck announced that it had received licence to operate in Japan.

The registration was approved by Japan’s financial regulator, the Financial Services Agency (FSA), after Coincheck improved its business in areas such as risk management and customer protection. The company said that it was committed to further improving its service in terms of security and usability.

Following last year’s hack, the platform was fully acquired by Japanese online brokerage Monex Group for $33.5 million. The move was part of Monex’s previously announced strategy to tap into the digital currency sector.