Gateio has announced it will stop all services in Japan, including opening new accounts for Japanese residents, starting today. This is part of a legal compliance program to help users switch to crypto trading platforms that meet Japan’s regulations.
Gateio has had a rocky relationship with the country. For the Japanese, Gateio was appealing for many reasons. First, it [reportedly] offered leverage of over 100 times, which attracted traders looking for higher returns.
Second, the zero-cut system meant the exchange would cover negative balances caused by market fluctuations, protecting users from falling into debt.
But Gateio wasn’t licensed by the Japanese Financial Services Agency (FSA), a requirement for legal operations in Japan. Despite this, it continued to serve Japanese users, as no law explicitly forbade residents from using overseas exchanges.
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This meant Japanese users were trading at their own risk since Gateio wasn’t under FSA oversight. The FSA requires exchanges to register and comply with specific regulations, including a leverage limit of 25 times, much lower than Gateio’s offering.
Gateio was kind of smart with it, in that it didn’t actively market to Japanese users, avoiding direct confrontation with the FSA. Instead, it provided a Japanese version of its website.
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Unlike other exchanges, Gateio didn’t actually establish a local entity in Japan. Major exchanges like Binance and Coinbase have received warnings from the FSA and have withdrawn from Japan.
Binance left in 2022 after a warning but re-entered by acquiring a local exchange. Coinbase left last year after the regulatory warnings. BitMEX left in 2020 thanks to the same thing.
