The Japanese securities regulator, the Financial Services Agency (FSA), is planning to warn Binance under the ‘Payment Services Act’ that it must stop operating in Japan without a license.
According to a source from Bloomberg, the world’s largest cryptocurrency exchange has several staff in Japan and has been expanding operations into Japan without seeking permission from the FSA and other necessary regulators. Currently Binance does not accept fiat deposits and requires no KYC/AML checks.
In January, Binance told Bloomber that it was working on acquiring a license and that Binance was “engaged in constructive dialogue”.
According to a report from Nikkei the exchange must secure permission from the FSA or they will receive a warning, which will likely be followed by a criminal complaint. According to the report from Nikkei, the FSA will press criminal charges if the company does not register.
Japan Tough But Fair
The Japanese regulators have been clamping down on cryptocurrency exchanges in the country following the Coincheck heist in January which saw $500 million in NEM.
In total 16 exchanges have received licences to operate within Japan, however, two exchanges were forced to suspend all services for a month due to inadequate security procedures. Five other exchanges were told to produce a ‘Security Improvement Plan’ by March 22nd.
However, the FSA has maintained a positive stance towards crypto exchanges on the whole. As long as the exchanges register and adhere to strict security controls the exchanges are encouraged to operate. Last year Japan declared Bitcoin a form of legal tender which has paved the way for merchant adoption of cryptocurrency.
Will “Binance Chain” Solve Problems?
Binance recently announced it will be launching a decentralised exchange to operate alongside its current operation. The Binance team has been investing resources to develop a “tailored blockchain”, for trading digital currencies. The new network is dubbed “Binance Chain” and it is a step forward in building a decentralized exchange (DEX).
It is hoped that a scalable and liquid DEX will help alleviate hacks and scams which have been plaguing centralised exchanges since their inception. Binance itself almost fell prey to a sophisticated phishing hack, however, it managed to thwart hackers and protect customer funds.