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Exchange Giant in Regulatory Trouble in Japan

Exchange Giant in Regulatory Trouble in Japan 101
Police squad on duty on the street of Kyoto, Japan. Source: iStock/Mustang_79

Binance, one of the world’s biggest crypto exchange platforms, is facing government rebuke for operating without a license in Japan, according to people familiar with the matter, Bloomberg reported.

It would seem that Binance, having several staff in Japan, has been expanding without receiving permission, so Japan’s Financial Services Agency (FSA) is planning to tell them to stop operating in the country. Binance is aware of this: they told Bloomberg News in January that they were working to acquire a license in Japan. The exchange is “engaged in constructive dialogue” with the FSA and has “not received any mandates” from the regulator, founder and CEO Changpeng Zhao said on Thursday.

The Japanese regulatory agency has issued licenses to 16 crypto exchanges, while another 16 were given permission to operate without a license. Among the latter group was Coincheck Inc., which suffered a USD 400 million hack in January. After the theft, Japanese authorities have been very rigorous in their requirements of the industry, issuing penalties and suspensions to platforms and local venues for not following the rules by obtaining licenses or upping their security measures.

After these problems that Binance faces were first made public by Nikkei, the price of Bitcoin, Ripple and Ethereum fell. The market is concerned that this sort of regulatory scrutiny will lower the demand for cryptocurrency. It is trading at USD 8,741.59 as of 11:41 am UTC, according to Coinmarketcap.com, while Ethereum goes for USD 542.38, and Ripple is at USD 0.664914.

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