Japan’s FSA Warns KuCoin Over Unregistered OTC Derivatives Trading

Japan's Financial Services Agency (FSA) has put KuCoin on notice, citing its provision of over-the-counter (OTC) derivatives trading without the necessary registration. The agency specifically called out the platform for marketing these services to Japanese residents online, a clear breach of local financial regulations. KuCoin was just one of several companies highlighted in the warning, as regulators ramp up their scrutiny of foreign platforms operating within Japan's expanding crypto market. This action highlights the country's increasingly stringent stance on unregistered digital asset services and the associated risks of cross-border trading.

Authorities Tighten Oversight on Offshore Crypto Platforms

The FSA added KuCoin to its updated list of entities engaged in financial instruments business without proper registration, joining platforms like NeonFX, theoption, and GTCFX. Authorities noted that these firms were engaging in OTC derivatives trading solicitation online, which requires regulatory approval in Japan. 

Japan's crypto market continues to be a significant player on the world stage.  In a nation of roughly 123 million people, the Financial Services Agency (FSA) has identified over 12 million cryptocurrency accounts. Chainalysis's 2025 Global Crypto Adoption Index placed Japan at 19th, indicating consistent adoption even with tighter regulations. Authorities are now taking a stricter stance against platforms that don't follow the law, particularly those that target foreign local investors, as a result of the growing user base.

This move builds on previous regulatory actions concerning KuCoin and Japan's overall crypto policy. In a US case, the exchange had already admitted guilt and consented to pay about $300 million. Simultaneously, the country is stepping up its crypto regulations. In addition to examining frameworks for products like Bitcoin exchange-traded funds (ETFs), the government is considering stricter oversight under current financial laws. This indicates a more organised approach to digital assets. 

This latest warning showcases Japan's ongoing commitment to enforcing compliance within its crypto market, especially concerning offshore platforms. These measures may limit local users' access to some international services, even though they are intended to protect investors and increase transparency. As regulators become stricter, exchanges operating internationally will have to closely adhere to local laws to stay active in crucial markets such as Japan.