Coincheck, a Japanese cryptocurrency exchange once known for suffering one of the largest hacks in digital asset history, has officially regained its legal operating status. On January 11, the exchange was formally approved by Japan’s Financial Services Agency (FSA) as a registered virtual currency exchange operator.
This approval marks a major milestone in Coincheck’s recovery journey and reflects Japan’s ongoing effort to regulate and legitimize its cryptocurrency market under the Payment Services Act.
Japan’s Regulatory Framework for Cryptocurrency Exchanges
The Payment Services Act came into effect in Japan on April 1 of last year, establishing a legal framework for cryptocurrency operations. This law recognizes cryptocurrencies like Bitcoin as legal forms of payment and requires all exchanges operating in Japan to register with the FSA.
The registration process is rigorous. The FSA evaluates applicants based on several criteria, including:
- Operational reliability and security measures.
- Compliance with anti-money laundering (AML) protocols.
- Financial stability and user protection mechanisms.
- For foreign exchanges, adherence to cross-border transaction laws.
Coincheck’s successful registration brings the total number of fully licensed exchanges in Japan to 17. This group includes other major platforms like QUOINE, bitFlyer, and GMO Coin.
The 2018 Hack: A Defining Moment for Coincheck
Coincheck’s path to legitimacy was not smooth. In January 2018, the exchange was victimized by a massive cyberattack, resulting in the loss of approximately 580 million Japanese Yen worth of NEM (XEM) tokens. This incident, one of the largest cryptocurrency thefts ever recorded, shook the industry and drew intense scrutiny from Japanese regulators.
In the hack’s immediate aftermath, the FSA imposed strict business improvement orders on Coincheck. The exchange was effectively barred from accepting new customers or processing cryptocurrency purchases for months, a period that the company’s leadership described as being "grounded" by the government.
It wasn't until late October that Coincheck began a partial restoration of its services, with a full reopening of all nine of its listed cryptocurrencies occurring on November 26.
A New Beginning Under Monex Group
A critical turning point in Coincheck's recovery was its acquisition by Monex Group, Inc. in April 2018. Monex is a well-established online securities brokerage with legitimate financial licenses in Japan, the U.S., Australia, and Hong Kong.
The acquisition provided Coincheck with the financial backing, regulatory expertise, and corporate governance structure needed to rebuild. Monex saw the purchase as a strategic entry into the innovative cryptocurrency market.
Under Monex's ownership, Coincheck undertook a comprehensive overhaul of its security systems and internal management practices to meet the FSA's stringent standards. This corporate support was instrumental in guiding Coincheck through the arduous process of reapplying for and ultimately securing its exchange license.
The FSA’s Stance and Investor Warnings
Even as it approves exchanges, the FSA maintains a cautious stance toward cryptocurrencies. In its official announcements, the agency explicitly states:
"Virtual currency is not a 'legal tender' guaranteed by the state like the Japanese Yen or U.S. Dollar. It is electronic data exchanged on the internet... The price of virtual currency may fluctuate drastically, and it could potentially become worthless."
This warning underscores the agency’s focus on ensuring that registered exchanges provide adequate risk disclosures and consumer protections to their users.
Looking Forward: Coincheck’s Role in Japan’s Crypto Future
With its legal status secured, Coincheck is poised to re-establish itself in the Japanese market. Its parent company, Monex Group, has demonstrated a strong commitment to the digital asset space, notably by participating in a $27.5 million Series B funding round for the U.S.-based crypto exchange ErisX alongside traditional finance giants like Fidelity and Nasdaq.
Coincheck’s return as a fully licensed entity is a significant story of corporate recovery and regulatory compliance. It signals that with robust security, transparent operations, and strong corporate governance, exchanges can overcome major setbacks and contribute to a healthier, more innovative financial ecosystem.
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Frequently Asked Questions
Q: What was the Coincheck hack?
A: The Coincheck hack was a major security breach in January 2018 where hackers stole NEM tokens valued at approximately $530 million from the Japanese cryptocurrency exchange. It remains one of the largest cryptocurrency thefts in history.
Q: Why did the FSA approve Coincheck after such a major hack?
A: The FSA approved Coincheck only after a thorough review confirmed that the exchange, under its new ownership by Monex Group, had completely overhauled its security protocols, management structure, and compliance systems to meet Japan's strict regulatory standards.
Q: How many licensed cryptocurrency exchanges are there in Japan now?
A: Following Coincheck's approval, there are now 17 fully licensed and registered cryptocurrency exchanges operating legally in Japan under the Payment Services Act.
Q: Is it safe to trade on Coincheck now?
A: While no platform can guarantee absolute safety, a licensed exchange in Japan is subject to ongoing FSA supervision and must adhere to strict security and consumer protection rules. Coincheck's new systems under Monex are designed to be far more robust than before the hack.
Q: What does the FSA think about cryptocurrencies?
A: The FSA recognizes cryptocurrencies as a legal payment method but also explicitly warns investors that they are not government-backed legal tender, are highly volatile, and carry a significant risk of loss.
Q: Can users now buy and sell all cryptocurrencies on Coincheck?
A: Yes, Coincheck has fully restored its services and allows trading for all nine of the cryptocurrencies it lists on its platform.