HitBTC, a Hong Kong-based cryptocurrency exchange, has recently announced it’s going to suspend operations for users in Japan in an effort to comply with local regulations, so it can then launch a licensed subsidiary in the country.
According to an announcement HitBTC published, ‘temporarily’ suspending services for the country’s residents is a response to requirements mandated by Japan’s financial regulator, the Financial Services Agency (FSA).
Per the announcement, the suspension comes after HitBTC’s team started working with a “worldwide-recognized Japanese law firm” on setting up and licensing a local subsidiary. Once it’s set up, the exchange will attempt to re-engage the country’s users as it is “actively hiring for the local office and exploring M&A opportunities to expedite the launch of the Japanese operations in Q3 2018.”
The suspension is set to include all Japanese residents, and will affect those who’ve used HitBTC with an IP address registered in the country. In these cases, users will have to turn in their ID and other documents to prove they aren’t living in Japan and lift the suspension.
Users will have a 14-day deadline to prove they aren’t living in Japan. If they fail to meet it or are living in the country, the exchange will suspend their accounts. It warned:
“If you fail to provide information about your residency by Deadline Date OR confirm that you are resident of Japan we will suspend providing services to you and you will only be able to withdraw your crypto assets from HitBTC.”
HitBTC, currently the fifth-largest cryptocurrency exchange by trading volume, noted that its role as an “industry leader” brings in “an incredible level of responsibility,” which implies it needs to keep user funds secure and comply with local regulations.
Notably, the Japanese market has been turning into a highly competitive one, with various financial giants launching crypto exchanges in it. These include Yahoo!, Coinbase, SBI, and others.
The country’s financial regulator – the FSA – has increased scrutiny after Tokyo-based exchange Coincheck lost over $500 million worth of NEM while operating without a license. Since then, various exchanges received warnings, with Binance’s case being notable.
HitBTC itself is facing legal action from Karma Group, a cryptocurrency token issuer, over its failure to uphold its share of a mutual agreement that would see it lists the group’s token, after receiving a 527 ETH payment for it.