Japan's Financial Services Agency (FSA) has escalated its regulatory enforcement, issuing critical warnings and correction orders to cryptocurrency exchange KuCoin and several other financial platforms for operating without proper registration in the country. The FSA specifically identified Seychelles-based KuCoin, along with NeonFX, TheOption, and GTCFX, as entities that received correction orders in March 2025 for soliciting over-the-counter derivative transactions online without authorization.
The regulator noted that KuCoin has been providing services to residents of Japan despite lacking the mandatory FSA registration. This action is not the first against KuCoin; the FSA issued a similar warning in November 2024, and in February 2025, it escalated by requesting Apple and Google to suspend downloads of the KuCoin mobile application in Japan. The repeated warnings indicate persistent non-compliance issues from the exchange.
Japan maintains one of the world's most established and strict regulatory frameworks for crypto, established following the 2014 Mt. Gox collapse. The Payment Services Act (PSA) and Financial Instruments and Exchange Act (FIEA) govern operations, requiring all platforms offering services to Japanese residents to register. This process involves rigorous capital requirements (minimum ¥10 million), security measures like cold storage, customer fund segregation, and strict AML/KYC procedures. Registered exchanges must also participate in the Japan Virtual Currency Exchange Association (JVCEA).
The enforcement occurs as Japan prepares a significant regulatory shift, transitioning crypto oversight from the PSA to the FIEA. This move will reclassify digital assets closer to financial instruments, expanding reporting requirements for token issuers and granting regulators broader authority, particularly over derivatives and structured products.
The FSA's public list of unregistered operators serves as a primary investor protection tool. Analysts note the warnings carry significant implications: Japanese users of unregistered platforms lack standard consumer protections, their assets may not be properly segregated, and they have limited recourse in cases of insolvency or security breaches. Market effects often include increased investor caution toward offshore exchanges, potential withdrawal surges from warned platforms, and heightened due diligence.
Japan's crypto market remains significant, with the FSA reporting over 12 million crypto accounts as of February 2025 within a population of 123 million, ranking the country 19th in Chainalysis's 2025 Global Crypto Adoption Index.
