Cryptocurrency exchange Huobi Pro has sent an email to users stating that it will suspend crypto trading services in Japan by July 2nd, as reported by crypto news website Coinpost. Coindesk confirmed the news by reaching out to the exchange for additional information.
Since the company is not registered with the Financial Services Agency (FSA), Huobi Pro has no other option but to close its doors to Japanese residents. Meanwhile, Huobi’s U.S. strategic partner HUBUS announced the appointment of a new executive Frank Fu on June 25th.
Ever since crypto-related scams have increased, Japan’s authorities have been tightening their rules around cryptocurrency exchanges. In February 2018, the Japanese National Police Agency (NPA) published a report that found 669 cases of crypto-related money laundering cases between April 2017 and December 2017. On top of that, crypto exchange Coincheck was hacked in January 2018, when criminals stole $500 million worth NEM. All of the stolen cryptocurrencies were being stored in a hot wallet, which is why the hackers found it easy to drain them quickly. The FSA then issued “business improvement orders” to Coincheck as well as six other exchanges.
Soon, the agency began inspecting unlicensed crypto exchanges to minimize further risks. Companies were required to register as well as provide security protocols and details of safety procedures during cyber attacks. During these events, Japan-based financial services company SBI holdings cancelled its partnership with Huobi Group.
In May 2018, the FSA published five new rules for crypto exchanges. From storing cryptocurrencies in cold wallets and verifying customer information in large transactions to creating strong internal regulations, exchanges must comply with every single statement.
Under these new orders, the FSA refused FSHO’s request to open a crypto exchange in Japan. They also issued more business improvement orders to Bitflyer, Tech Bureau, Bitpoint Japan, Btcbox, Bitbank, and Quoine this month.