FSA scrutiny on the virtual coin market could help to obtain the permit as Coinbase has experience with security guarantees, Mike Lempres explained.
Mike Lempres, the chief technological officer (CTO) of US-based Coinbase, has said he is confident that the company will receive a crypto exchange license from Japan’s Financial Services Agency (FSA) next year. The Japanese authorities’ tightened oversight on the crypto market works in favor of Coinbase’ successful application, Lempres explained in a recent interview with Asian Nikkei Review, published on Wednesday.
Coinbase has proven experience of guaranteeing security, as a significant part of its staff is dedicated to that issue, according to the CTO, and that will help with the company’s regulatory approval. Moreover, only 1% of Coinbase funds are stored on internet-connected (hot) wallets while 99% rely on offline (cold) devices. FSA recently has banned hot storage as that method is easier to hack than cold systems.
“We are… committed to getting it [the license] done. It will certainly be in 2019,” Lempres said as quoted by Asian Nikkei Review. “The Japanese government is more focused on security. That is good for us.”
Coinbase, which filed its application with the FSA in June, has still issues under discussion with the regulator including the location of the management system, Lempres noted. A requirement for Japan hosting the system will enable the FSA more easily and strictly control the transactions, but will create difficulties for Coinbase, the technological executive said.
“We have everything built to protect our storage… in the US,” Lempres.
“We won’t do anything to even raise the possibility of a hack. It would be hard for us to duplicate what we do in the US today in Japan and other countries.”
Japan is one of the most active cryptocurrency markets, and is dominated by retail investors. After the $530 million Coincheck hack in January this year, the FSA conducted several on-site inspections, issued business improvement orders to several exchanges and introduced new rules for crypto trading. Currently, 160 companies are seeking digital exchange permits including messaging giant Line, which recently launched a crypto trading operator in Singapore.