After more than two years, the San Francisco-based cryptocurrency exchange OKCoin received its license as a virtual currency service provider from the local financial office of Kanto in Japan. “In Japan, the rate of return is low on any real estate and stock exchange activity because interest rates are low.
Asset management companies and large institutional insurance companies want a slightly higher return on their businesses, "said John Feng, CEO of OKCoin Japan, a subsidiary of the blockchain services company OK Group.
Once a Chinese cryptocurrency exchange known as "Big 3", OKCoin had to move to San Francisco after its fiat-to-crypto trading was banned in late 2017. The company's customer base includes customers from China, Hong Kong. Kong, Japan, Korea, the United States, Europe, Russia and Turkey.
The road is still long
The journey for invest OKCoin's to Japan started in 2017. In the first eight months after the cryptocurrency law passed, Japan's Financial Services Agency (FSA) licensed 16 exchanges.
Licensing has become more difficult, however, after an attack on the Coincheck cryptocurrency exchange. Since then, the FSA and self-regulation rules promoted by the Japan Virtual Currency Exchange Association (JVCEA) have become much stricter.
The Japanese regulator has not authorized any scholarships for a year and costs have started to increase once the approval process has resumed. The increase in these costs is also the reason why the Kraken cryptocurrency exchange chose to close in Japan in April 2018.
Licensed exchanges in Japan are considered financial institutions and their anti-money laundering (AML) and know-your-customer (KYC) restrictions are just as stringent as those imposed on banks in the country.
OKCoin already has a Business Services license in the United States and is registered with the United States Financial Crimes Enforcement Network (FinCEN). He also has a temporary license in Malta and is pursuing a license in Singapore.
Getting a license under one of the world's most stringent regulatory regimes means that money transfers will be significantly easier to perform under the new FATF travel rule, Feng said.
First outsider
The exchange claims to be the first non-Japanese to obtain the license through the strict FSA regulations instead of buying an already authorized Japanese exchange. For OKCoin, the licensing process involved creating a team of around 40 employees and developing a proprietary automatic transaction monitoring system.
FSA's next move will include amendments to the Japan Financial Instruments and Exchange Act and the Japan Payment Services Act in effect since May 1, which will create stricter restrictions for exchanges wishing to enable cryptocurrency trading.
These amendments forced the BitMEX cryptocurrency exchange to close parts of its business in the country. OKCoin plans to work another six months to receive that license.
