Cryptocurrency | Local startup warned to halt operations in Japan

Macau-based company, Block Chain Laboratory Ltd, which has been encouraging investors in Japan to invest in cryptocurrency services, was warned by Japan’s Financial Services Agency (FSA) to halt its operations since it is not licensed to do business in Japan.

The local startup offers seminars and consulting services on cryptocurrencies in Japanese, according to its website.

According to a Bloomberg report, Block Chain’s co-founder Jay Loi said he could not immediately discuss the FSA’s order, while FSA officials said the company was not applying for an exchange license.

Following a revision to the payment services bill last April, Block Chain Laboratory does not meet the criteria of the FSA’s regulations.

The regulations permit only registered cryptocurrency services, or those that have applied for registration, to do business in Japan.

As cited in reports, the regulator is concerned the company’s activities could lead to investors incurring losses.

The FSA intends to work with the police and the Consumer Affairs Agency to bring criminal charges to the local-based firm if it does not respond to the warning.

Aside from Block Chain Laboratory, the FSA is also investigating 15 unregistered exchanges on suspicion of wrongdoing.

The FSA have also repeatedly advised Blockchain Laboratory to stop its operations in Japan but their advice has not influenced the company. This has forced the agency to issue a direct warning and they have also named the firm on their homepage.

The Times contacted the company but no reply was received by press time.

“We have not figured out the whole picture, but the number seems to only increase as we investigate,” an FSA official said.

In a separate case, Japanese cryptocurrency exchange Coincheck Inc, which lost USD530 million worth of digital currency in a hack, has begun accepting requests to withdraw yen.

The Japanese company, which pledged to reimburse victims of the hack, was also ordered to submit a business improvement plan to the FSA, explaining how the hack occurred and its plans for improving its security.

“Protecting customers and limiting the extent of damage are of utmost importance,” said Financial Services Minister Taro Aso. “We will continue to address issues to make sure consumers are protected.”

The Monetary Authority of Macao told the Times that it does not approve of such businesses and that it has reminded the financial services industry to avoid cryptocurrencies.

“Virtual currency is a virtual commodity which is neither legal tender nor a financial instrument subject to financial supervision,” the authority previously wrote in a statement.

“Trading of these commodities involves considerable risks, including but not limited to those relating to money laundering and terrorism financing,” the statement added.

The bureau stressed that it has sent a circular memo to remind all banking and payment institutions in Macau to not participate in cryptocurrency-related operations in a bid to halt such activities in the city.