A senior executive of Coinbase gave assurance that an operating license will be received by the firm in Japan by 2019, even as the country’s regulators are improving in thorough research of crypto exchanges.
The chief policy officer of Coinbase, Mike Lempres, stated that the procedures involved in acquiring a license are “going well” with the Financial Services Agency (FSA), according to the report by Nikkei Asian Review on Wednesday. He further stated that the firm is “committed to getting it done,” which will “certainly be in 2019.”
The firm declared its intention to start operating in the Japanese market in 2016, and in June, the former Morgan Stanley Japan staffer Nao Kitazawa was appointed to manage its local office.
According to a report last month, Lempres has left his former position as the chief legal officer for the exchange, and presently he handles government affairs.
According to him, presently the top concern at the FSA is the issue of security. FSA is responsible for controlling Japan’s financial markets after the two major crypto exchange hacks in the country this 2018 which affects Coincheck in January and Zaif in September.
Since the beginning of 2018, no any crypto exchange licenses have been issued by the FSA, even though 16 applications have been reviewed. However, over 160 companies including public firms are intending to propose exchange licenses, according to an earlier report.
However, Lempres stated that the watchdogs have strengthened their position which actually is in Coinbase’s favor since 99 percent of the exchange’s funds are stored in offline in cold wallets which are not connected to the internet, thereby making a major cyber-attack far less possible.
“The Japanese government is more focused on security,” he stated, further adding: “That is good for us.”
According to him, the major concern presently is whether Coinbase will be needed by the FSA to copy its U.S. system inside Japan. With this move, FSA could control transactions, however, the possibility of a hack could increase, Lempres cautioned.
“We have everything built to protect our storage… in the U.S. … It would be hard for us to duplicate what we do in the U.S. today in Japan and other countries,” he stated.