Gate Exchange Signals Exit from Japan, Launches Compliance Program

• Gate.io suspended new account registrations for Japanese customers on July 22, 2024.
• It has also begun shutting down operations at its Hong Kong exchange, Gate.HK.
• A full schedule for the total closure of Gate.io’s Japanese arm is yet to be disclosed.

Leading crypto exchange Gate.io has announced that it will shutter operations in Japan, beginning with the suspension of new registrations for Japanese clients.

The move, citing regulation and compliance, comes as Japanese regulators are tightening rules on crypto services and operators.

Gate.io Japan

As per the official  release from Gate.io, new account registrations for Japanese customers have been suspended since July 22, 2024, as the company begins to wind down operations.

To facilitate a smooth transition, the exchange is launching a program to help user migrate their transactions and funds across to crypto exchanges that are compliant with Japanese regulations.

In addition, the exchange will take additional steps to comply with the law, which includes deleting Japanese descriptions as well as limiting the availability of Japanese language options.

At the same time, Gate.io’s Hong Kong-based operation, Gate.HK also began to shutter  operations in late May 2024. Users have until August 8, 2024, to withdraw all of their assets from the platform.

Gate.io intends to provide the schedule for suspended services, in accordance with Japan’s Financial Service Agency (FSA) requests, at a later date. The exact date for the complete shutdown of the exchange in Japan is not yet known.

Regulatory Pressures?

It is unclear if the “regulatory pressures and compliance requests” from the FSA caused Gate.io’s departure from Japan. However, within its announcement, it cites a desire to remain compliant as the reason behind its closure in Japan, writing:

“As one of the world’s leading cryptocurrency exchanges, we strive to comply with financial regulations in all jurisdictions in which we operate.”

Interestingly, the exchange is not registered  on the FSA’s website. Suggesting the firm had not been as compliant in the past, as it intends to be now.

“We continue to cooperate with financial regulators in all jurisdictions in which we operate to ensure compliance.”

Regardless, the exchange maintains a strong global presence. According to CoinGecko, the exchange commands  2,262 tokens across 3,557 trading pairs, with 24-hour trading volumes sitting at a sturdy $19 billion.

Japan’s Crypto Regulations

After the 2014 Mt. Gox hack, which resulted in hundreds of millions of dollars worth of Bitcoin (BTC) being stolen, Japan became one of the first countries to regulate crypto.

It introduced stringent regulations but made history in 2017 when it passed the Payment Services Act. This was amended  to include “virtual currencies” as a legal form of payment.

It would then bring crypto exchanges under the FSA, which would approve exchange applications. The FSA would also decide the cryptocurrencies they could list on said exchanges.

In 2020/21, stricter rules and regulations were implemented as the FSA introduced rigorous licensing requirements. This included financial stability assessments for exchanges and demanding significant and enhanced security measures.

Notably, this included mandatory segregation of client funds from corporate assets. As well as tighter know-your-customer (KYC) and anti-money laundering (AML) protocols.