- Gate.io has announced its decision to exit Japan due to regulatory concerns
- The exchange has notified users and prohibited new accounts, with offboarding to commence in the coming weeks
- Japan has increased its regulatory oversight of the crypto sector in recent years
Crypto exchange Gate.io has announced that it will quit Japan due to regulatory concerns. The exchange notified users on Monday of its decision, saying only, “we strive to comply with financial regulations in all regions in which we operate.” New accounts are now prohibited and the platform will embark on a plan of offboarding customers in accordance with Japanese law. Gate.io’s decision to leave follows the decision by Coinbase and Kraken to leave the country.
Japan Has Beefed Up Regulations
Japan has significantly evolved its regulatory framework for cryptocurrencies in recent years as part of a desire to foster innovation while ensuring market integrity and consumer protection.
In 2020, Japan amended the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA), changing the terminology from “virtual currency” to “crypto-asset” and tightening regulations on crypto derivatives trading and custodial services. These amendments mandated that cryptocurrency exchanges must register with the Financial Services Agency (FSA) and adhere to stringent Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) measures, ensuring robust cybersecurity and operational protocols.
By 2023, further regulatory advancements were made; the FSA introduced changes to the tax code for digital assets and updated corporate tax guidelines to exempt token issuers from unrealized gains tax, which was seen as a move to stimulate the Web3 industry. The FSA also collaborated with international counterparts, like the Monetary Authority of Singapore, to jointly regulate and pilot cryptocurrency projects.
Earlier this year, Japan’s cabinet approved a bill allowing investment funds and venture capital firms to acquire crypto assets, promoting economic growth and innovation. The FSA and the National Police Agency also emphasized enhancing user protection against unlawful crypto transfers, reflecting a balance between encouraging crypto adoption and ensuring security.
Offboarding to Take Place
Gate.io didn’t state what it was about the regulations that had suddenly caused them to leave Japan, stating only that it was the reason for its exit:
As one of the world’s leading cryptocurrency exchanges, we strive to comply with financial regulations in all regions in which we operate. Based on this commitment, we regret to inform you that we will be terminating our services for Japan.
The exchange will follow Japanese law with its removal of customer data, with details of the suspension of its services and the response and schedule for the plan for transaction migration will be announced shortly.
