Japan’s financial watchdog has escalated its efforts to tighten control over digital asset trading platforms, marking a significant step in its regulatory approach. The country’s Financial Services Agency (FSA) has ordered tech giants Apple and Google to remove five cryptocurrency exchange apps from their stores, reinforcing its stance against non-compliant platforms.
Apple and Google Forced to Remove Crypto Apps
On Friday, February 7, Japanese business daily Nikkei reported that the FSA instructed Apple and Google to delist the mobile apps of five cryptocurrency exchanges: Bybit, MEXC Global, LBank Exchange, KuCoin, and Bitget. The directive comes as part of Japan’s effort to crack down on unregistered exchanges that operate within its jurisdiction without proper licensing.
Apple swiftly complied with the order, removing the specified apps from its App Store on February 6. According to Apple, the company had previously warned these exchanges to cease operations in Japan, but they failed to comply. Google has yet to confirm whether it has taken similar action against the apps on its Play Store.
This is the first time Japan’s FSA has directly intervened to block access to crypto platforms through mobile app stores, setting a precedent for future regulatory enforcement.
Japan’s Rationale for Stricter Crypto Regulation
Japan has long maintained one of the strictest regulatory frameworks for cryptocurrency exchanges. The FSA requires all crypto platforms to register with the agency before offering services in the country. The registration process ensures compliance with financial regulations and enhances investor protection.
In 2023, Japan introduced more stringent anti-money laundering (AML) measures targeting digital assets, further reinforcing its commitment to financial oversight. The latest action against the five exchanges aligns with these broader regulatory goals.
A significant driver of Japan’s strict approach is its history with major financial crises related to digital assets. The most notable example is the collapse of Mt. Gox in 2014. At its peak, Mt. Gox was the largest Bitcoin exchange globally, handling over 70% of all Bitcoin transactions. However, after suffering a massive hack that resulted in the loss of 850,000 BTC, the exchange went bankrupt. The incident prompted Japan to introduce stricter regulations to safeguard investors from similar risks.
Implications for the Global Crypto Market
The enforcement action against non-compliant exchanges underscores Japan’s commitment to regulatory enforcement, but it also signals a broader trend of increasing scrutiny on crypto operations worldwide.
- Other jurisdictions, including the European Union and the United States, have been tightening crypto regulations.
- Binance, the world’s largest crypto exchange, previously faced scrutiny from the FSA but was able to re-enter the Japanese market by acquiring the licensed Sakura Exchange BitCoin in 2022.
- Retail investors in Japan may face fewer choices as regulatory crackdowns continue to reshape the landscape of cryptocurrency trading in the country.
Despite the tightening grip of regulators, Japan’s approach is not necessarily aimed at banning cryptocurrencies. Instead, it seeks to ensure that only compliant platforms operate, offering greater security and transparency to investors.
What’s Next for Crypto Exchanges in Japan?
With the removal of these apps, the affected exchanges must now decide whether to pursue legal registration in Japan or exit the market entirely. The FSA is expected to continue monitoring the sector closely and could take further actions if more non-compliant platforms are found operating within the country.
For global crypto exchanges looking to expand into Japan, the message is clear: registration and compliance with local regulations are non-negotiable. Those failing to adhere to these standards risk losing access to one of the most tech-savvy and investment-rich markets in the world.
Japan’s latest move may be a sign of things to come for other jurisdictions, as governments worldwide grapple with balancing innovation and investor protection in the evolving cryptocurrency landscape.
