Hitbtc has suspended its services for Japanese residents to avoid any trouble with the country’s financial regulator since it is not authorized to operate in Japan. Users with Japanese IP addresses will be asked to provide their residency information within the exchange’s know-your-customer (KYC) procedure to prove they are not residents of Japan.
Suspending Services in Japan
Hitbtc, the world’s eighth largest crypto exchange according to Coinmarketcap, has announced a service suspension for Japanese residents.
On its website, the Hong Kong-based exchange added a new section called Service Restriction to the Legal Information page of its Terms of Service. “You shall not use our services and immediately cease using those if you are a resident or become a resident at any time of the state or region where Hitbtc is not authorized to act,” the exchange wrote, adding:
For the avoidance of any doubt and in accordance with the Japan Payment Services Act, Hitbtc has temporarily suspended providing virtual (crypto) currency exchange services to residents of Japan.
The exchange elaborated, “In case our technology detects that you use our services from an IP address registered in Japan, or any other services registered in Japan, you would be asked to confirm that you are not a resident of Japan by providing information on your residency within KYC procedure.”
The exchange subsequently posted a notice on its website on Sunday confirming the suspension, reiterating that it “will apply only to those living in the country.”
Hit Solution Ltd provides access to crypto assets exchange platform under the registered trademark Hitbtc. Since 2013, the platform “has been providing markets for bitcoin, ethereum, litecoin, dogecoin, monero, USDT, and more than 300 cryptocurrencies in total,” its website details. The exchange’s 24-hour trading volume at the time of this writing is $281,395,577.
Avoiding Trouble with the Regulator
The Japanese Payment Services Act that Hitbtc refers to went into effect in April last year, legalizing cryptocurrency as a means of payments.
However, it also mandates any crypto exchanges operating in the country to register with the country’s financial authority, the Financial Services Agency (FSA). So far, 16 crypto exchanges have been granted a license to operate and the same number were allowed to operate while their applications are pending. Out of the latter 16, the FSA recently revealed that 8 have indicated that they are withdrawing their applications.
The agency has also warned some exchanges that have been operating in Japan without a license. Among them was Binance, the exchange whose 24-hour trading volume often tops the list of the world’s largest. On May 23, the agency sent a letter to Binance and its representative, CEO Changpeng Zhao, warning them about operating in Japan without a license. In April, crypto exchange Kraken announced its withdrawal from the Japanese market, citing high costs to comply with the FSA rules, which became stricter following the hack of Coincheck in January.
In Sunday’s announcement, Hitbtc revealed that it has been working with a Japanese law firm with the aim “to get Hitbtc through the local subsidiary setup and licensing procedure to resume its services” for Japanese residents, adding:
The company is actively hiring for the local office and exploring M&A opportunities to expedite the launch of the Japanese operations in Q3 2018.
What do you think of Hitbtc’s strategy in Japan? Let us know in the comments section below.
Images courtesy of Shutterstock, FSA, and Hitbtc.
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