FSA Warns Hong Kong-Based IZAKA-YA Over Unregistered Japanese Operations

Japan's Financial Services Agency (FSA) has issued a formal warning to Hong Kong-based Izakaya Limited for allegedly operating its cryptocurrency exchange and lending services, IZAKA-YA, in Japan without proper registration. This move underscores the country's strict stance on unlicensed crypto activities, even when the operator is based overseas.

The FSA's warning targets Izakaya Limited's provision of crypto lending, swap services, and exchange functions via the internet to users in Japan. Under Japan's Payment Services Act, any entity facilitating cryptocurrency exchange or custody for Japanese residents must register with the FSA. Operating without such registration is a violation that can lead to criminal penalties and a public notice warning consumers of the risks.

In response to the FSA's warning, IZAKA-YA announced on August 24 that it had temporarily suspended transfers and withdrawals for certain accounts after identifying transactions suspected of involving illicit fund inflows or potential money laundering. The company stated it would require enhanced know-your-customer (KYC) verification for all users, a move aimed at addressing compliance gaps.

This is not an isolated case, as Japan has consistently pursued foreign crypto operators that target its residents without proper licensing. In recent years, the FSA has issued similar warnings to overseas exchanges, reminding them that offering services to Japanese customers requires local registration.