Binance issued warning over licensing

Japan's Financial Services Agency issues warning statement to Binance over lack of license

Mike Richardson
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Japan's top financial regulator has issued a warning to cryptocurrency exchange Binance.

Binance, currently the world's largest cryptocurrency exchange by trading volume, has received In a warning published by the Financial Services Agency suggesting that the company lacks the required registration licence.

Binance, founded by Zhao Changpeng, was warned because it had several staff in Japan and had been expanding without official permission, according to a person familiar with the FSA’s plans, who asked not to be named because the information is private.

Yet the statement does not entail whether the regulator is weighing criminal charges, as indicated in the previous report from Nikkei. The exchange told Bloomberg earlier this year that it was working with Japanese regulators to secure a license.

The sharp pullback in the price of Bitcoin late on Thursday was attributed to this news and there was considerable confusion over the report and Bitcoin dropped over 4 percent - and altcoins dropped across the board - around the time the Nikkei report was published.

Zhao Changpeng, Binance's CEO, confirmed receipt of the warning letter and stated the firm's legal team is in dialogue with the agency.

The news adds to signs that governments around the world are stepping up scrutiny of cryptocurrencies amid worries that they’re facilitating everything from money laundering to tax evasion and fraud. Japan, one of the most active markets for digital assets globally, introduced a licensing system for virtual currency exchanges last year in an effort to improve oversight.

The FSA has been clamping down on cryptocurrency venues in the wake of a $500 million theft from Japanese exchange Coincheck Inc. in January. Last month, the regulator issued an administrative penalty against Macau-based Blockchain Laboratory Ltd. for giving seminars and providing consultation services in Japan without a license. Earlier this month, it suspended several local venues for poor security measures.

Binance was originally founded in 2017 and headquarterted out of China, and it later moved its offices to Japan to avoid the increasingly restrictive regulation from the Chinese government. Since then, the company has also set up offices in Taiwan and  has emerged as one of world's largest cryptocurrency exchanges by trade volume ($1.6 Billion in the last 24 hours). According to data from Alexa, the firm currently sees roughly 9 percent of its traffic visit from Japan.