On Thursday, Nikkei reported that Japan’s Financial Services Agency (FSA) was about to issue an exit order to the Hong Kong-based exchange, Binance. The Japanese media outlet reported that the decision to kick Binance out of Japan was because the exchange company was not registered with the regulator, and was in breach of the new laws and regulations.
The report indicated that the FSA was concerned that the company’s operations may pose a great risk to the local investors and was considering bringing criminal charges against Binance for failing to comply with the registration mandate.
Bitcoin News reports that the news appeared to instantly affect the cryptocurency markets, with Bitcoin dropping in value below $9000.
Binance CEO not Concerned
Although Binance has not yet provided an official response on the matter, its CEO and co-founder Changpeng Zhao has hit back at the reports, saying that FSA hasn’t yet published any such statement and that Nikkei had acted unprofessionally. The Binance CEO said,
Nikkei showed irresponsible journalism. We are in constructive dialogs with Japan FSA, and have not received any mandates. It does not make sense for JFSA to tell a newspaper before telling us, while we have an active dialog going on with them,
The CEO assured consumers that they have nothing to worry about as the matter is being deliberated and an amicable solution will be reached soon.
Anonymity Riled the Regulator
The Hong Kong-based crypto exchange has already applied for a license to operate in Japan legally after the authorities insisted that all exchanges operating in the country must be registered. After the Coincheck heist, where more than half a trillion dollars was lost in January, the FSA has intensified its crackdown, demanding transparency in the crypto market to avoid another fiasco.
Part of the FSA’s requirements is identification of traders. Binance has riled the regulator by failing to verify the identification of Japanese investors during account opening. Nikkei Asian Review writes,
The Japanese officials suspect Binance does not have effective measures to prevent money laundering; the exchange handles a number of virtual currencies that are traded anonymously.
This could be the reason that the exchange is yet to receive its license, leading to speculation that it could be forced to close its operations in the country. An exit from Japan would see Binance lose a huge chunk of its customers as about 9 percent of its traffic comes from there.
CoinDesk reports that the FSA has issued numerous warnings to overseas crypto exchange firms operating in Japan requiring them to adhere to the stated laws and regulations, or face criminal charges and possible closure.
What’s your take on Binance’s regulatory issues in Japan? Should the exchange platform ban anonymity trading? Share your thoughts with us in the comments section.