Japan Flags KuCoin and Others for Unregistered Derivatives Activity as Enforcement Pressure Builds

Japan’s financial regulator has issued fresh warnings to several crypto platforms, highlighting ongoing concerns over unlicensed derivatives activity targeting local users.

The Financial Services Agency (FSA) confirmed that platforms including KuCoin, NeonFX, theoption, and GTCFX were identified as conducting financial instruments business without registration. The notice specifically cited the online solicitation of over-the-counter derivatives trading, a regulated activity under Japanese law.

Among the entities listed, KuCoin was noted as actively offering services to residents in Japan despite lacking local authorization. The others were described as operating with a broader international user base, but still accessible to Japanese investors.

This is not the first time KuCoin has been flagged. The FSA previously issued warnings in November 2024, alongside other offshore exchanges such as Bybit. In February 2025, the regulator escalated its response by requesting Apple and Google to restrict downloads of KuCoin’s mobile application within Japan.

The latest action comes as regulators focus more closely on how unregistered platforms reach users. In many cases, access is maintained through direct web channels, social media promotion, or app distribution outside local compliance frameworks. Derivatives products, often marketed with high leverage or simplified onboarding, remain a key area of concern due to their risk profile and lack of investor safeguards on unlicensed platforms.

Japan remains a significant crypto market, with more than 12 million user accounts reported as of early 2025. This scale has made the jurisdiction a target for offshore exchanges seeking retail participation without meeting domestic regulatory requirements.

The FSA has reiterated that unregistered platforms do not meet standards related to asset segregation, transparency, or user protection. Customers using such services may face difficulties in recovering funds in the event of disputes, operational failures, or insolvency.

The warnings also align with Japan’s planned shift toward regulating crypto activities under the Financial Instruments and Exchange Act, a move that would expand oversight of derivatives and strengthen enforcement powers against non-compliant operators.