Japan’s financial regulator has issued a formal warning to KuCoin and several other firms for operating over-the-counter derivatives services without proper registration. This action follows a broader crackdown on unregistered crypto exchanges earlier in the year. The warning is part of an ongoing pattern of regulatory challenges for KuCoin across multiple jurisdictions, including Hong Kong, Austria, and Dubai, which has coincided with a significant decline in user-held assets on the platform.
Japan’s Financial Services Agency has flagged KuCoin and other crypto exchanges for operating certain services without proper registration. In a statement, the watchdog listed the exchange among unregistered businesses that received warning letters.
The agency added that KuCoin, NeonFX, TheOption, and GTCFX were issued notices in March for soliciting over-the-counter derivative transactions via the internet. This escalation came after authorities requested Apple and Google to block access to five unregistered exchanges, including KuCoin, in February.
The exchange’s regulatory woes extend beyond Japan, as it was forced to wind down operations in Hong Kong in May 2024. Failure to meet new licensing requirements prompted its withdrawal and the blocking of users from the region.
In February 2026, the Austrian Financial Market Authority partially banned KuCoin for failing to implement proper anti-money laundering procedures. This occurred just three months after the exchange obtained a MiCA license from the European Union.
KuCoin also received a cease and desist order from Dubai’s Virtual Assets Regulatory Authority in March for operating without a license. The firm was subsequently banned from advertising or operating in Dubai without valid authorization.
These recurring regulatory issues appear to have impacted user trust, as illustrated by declining exchange reserves. Bitcoin reserves on the platform dropped from 14,000 BTC in 2024 to 2,100 BTC in early 2026.
A deeper look at stablecoin reserves underscores user caution, with funds falling from over $1.3 billion to $543 million in one year. Even market rallies in mid-2025 and early 2026 did not attract significant new capital flows onto the exchange.
