Japan is seen as a digital money haven for its enormous pool of retail financial investors and government strategies. The east asian nation has progressive regulations around cryptocurrency exchanges, and ever since the infamous Coincheck hack of $500M, Japan had tighten its security, narrowing pathways, allowing only secure, legitimate exchanges to enter its market.
Coinbase has joined the Japan Virtual Currency Exchange Association (JVCEA) as a second-class member along with two other companies – Digital Asset Markets, and the Tokyo Hash. The membership of all three companies assumed from March 1, according to the announcement by JVCEA.
JVCEA is the self-regulatory organisation (SRO) given the mandate to oversee the industry by the Financial Services Agency (FSA) in 2018. The businesses registered as cryptocurrency exchange companies or planning to enter the Japanese market, both can apply to become second class members of the JVCEA.
Coinbase has had a Japanese exchange in its sights since as far back as 2016, after it received a $10.5 million investment from a group that included Bank of Tokyo Mitsubishi UFJ and Mitsubishi UFJ Capital. Its enrolment was thoroughly watched over, as the company’s entry in the Japanese market is a green signal towards the development of international companies in Japan.
In mid-2018, Coinbase named a chief executive for its local subsidiary, and later in the year indicated it was confident it would receive an operating license from the FSA before the end of 2019; but it was not to be.
In becoming a member of the SRO, Coinbase joins other second-class member firms “applying for or planning to apply for virtual currency exchange registration as prescribed in Article 63-3 of the Payment Services Act,” according to the JVCEA.
The body aims to ensure its exchange members carry out “sound” business as set out in local law. As an official SRO, it has the power to put in place rules for the nation’s exchanges and take action over any violations.