The largest US cryptocurrency exchange, Coinbase, is confident that it will secure regulatory approval to open a trading platform in Japan, local publication Nikkei Asian Review has reported.
The Japanese authorities adopted a firmer stance towards the cryptocurrency sector after local digital currency exchange Coincheck suffered a $532-million cyber heist in early 2018. However, in a recent interview with Nikkei, Coinbase’s chief policy officer Mike Lempres said that the increased regulatory oversight in the country is actually good for the company.
“The Japanese government is more focused on security," Lempres said, as quoted by Nikkei. "That is good for us.” He added that talks with Japan's Financial Services Authority (FSA) were progressing well and expressed confidence that the company would obtain operational licence from the financial watchdog next year.
Lempres went on to shed more light on the security measures employed by the US exchange to minimise the risk of cyber theft. He said that 99% of the funds held with the platform were stored offline, while the remaining 1% held in hot wallets were fully insured.
However, the company’s focus on security could create an unexpected hurdle in the discussions with the regulator. The key question is whether the FSA will require the the exchange's system to be managed in Japan, a move that would allow the regulator to more easily monitor transactions. At the same time, it could create additional security risks for Coinbase.
"We have everything built to protect our storage… in the U.S.," said Lempres. "We won't do anything to even raise possibility of a hack. It would be hard for us to duplicate what we do in the U.S. today in Japan and other countries."