Coinbase Expects Japanese Crypto License in 2019

Coinbase Japan cryptocurrency license

Leading crypto exchange and wallet service Coinbase has said it expects to receive the go-ahead on an operating license in Japan in 2019, as the firm continues to push for compliance with a host of new licensing regimes worldwide.

The company said that despite an increase in scrutiny of cryptocurrency exchanges from Japanese regulators, they were confident of securing the license.

If granted, the license would allow Coinbase to operate a regulated exchange inside the Japanese market, and comes at a time of increasing licensing activity from the San Francisco-based company.

Coinbase chief policy officer Mike Lempres said that the license will “certainly be done in 2019,” following a series of promising discussions with the Japanese Financial Services Agency.

Acknowledging the firm’s commitment to securing the license as soon as possible, he said the agency’s intensifying focus on security would work in Coinbase’s favor.

“The Japanese government is more focused on security. That is good for us.”

In particular, Japanese regulators have cited concerns over funds being held in online or “hot” wallets, at a significant risk of hacking and theft, as has been seen repeatedly in the sector over the last couple of years.

However, with Coinbase already storing as much as 99 percent of its holdings in offline cold wallets, this is expected to work in the firm’s favor. Lempres said that while this bodes well for their license application, it remained unclear whether Coinbase would be expected to duplicate its existing security processes in the Japanese market.

“We have everything built to protect our storage ... in the US. ... It would be hard for us to duplicate what we do in the U.S. today in Japan and other countries.”

As many as 160 firms are thought to be interested in applying for a Japanese license, with some 16 applications already being scrutinized. However, to date, regulators have been unwilling to approve any of the applications submitted.

With security said to be the agency’s chief concern, in light of high-profile hacks at Coincheck and Zaif, and Coinbase already regarded as one of the most secure exchanges of its kind, it remains to be seen whether this optimism leads to the first approval being granted.