Japanese mainstream media outlet Nikkei reported earlier this week that criminal charges could be filed against Binance if it failed to halt its Japan operations. Binance CEO Changpeng Zhao swiftly responded to the report, stating that it was “irresponsible journalism.”
On March 22, Nikkei reported that the Japanese Financial Services Agency (FSA) had warned Binance about its operations in Japan and asked the cryptocurrency exchange to stop providing its service to investors based in Japan. Nikkei’s initial report read, “Criminal charges to be filed if Binance fails to halt Japan operations.”
However, Zhao revealed that the Binance team had been communicating with Japanese financial authorities and the FSA. He further emphasized that it was irresponsible for Nikkei to report on an ongoing situation that requires both Binance and the FSA to cooperate to ensure that the Binance trading platform can serve Japanese customers without being in conflict with the country’s regulations.
“Nikkei showed irresponsible journalism. We are in constructive dialogue with Japan[‘s] 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,” said Zhao in a statement.
About 15 hours after Zhao released that statement, he stated that the Binance team had received a simple letter from the FSA requesting Binance to comply with Japanese regulations. Since the Japanese government requires every exchange within the country to obtain a license from the FSA, the letter likely asked Binance to register with the FSA to obtain a license to operate as an exchange.
“We received a simple letter from JFSA about an hour ago. Our lawyers called JFSA immediately, and will find a solution. Protecting user interests is our top priority,” said Zhao. He added that in the long term, the current situation could turn out positive for the company, as it could provide an opportunity for the firm to continue operating in Japan as a properly regulated and licensed exchange.
“No need to worry. Some negative news often turn[s]out to be positive in the long term. [The] Chinese have a proverb for this. New (often better) opportunities always emerge during times of change,” Zhao explained.
Since the bankruptcy of now-defunct cryptocurrency exchange Mt. Gox, the Japanese government has strictly regulated its cryptocurrency exchange market, demanding that every trading platform obtain a license to operate as a regulated financial service provider, essentially with bank status.
The regulatory program of the Japanese government for the cryptocurrency market has proven to be positive, as Japan quickly became the largest cryptocurrency exchange market internationally, overtaking the US. According to cryptocurrency market data provider CryptoCompare, Japan accounts for 56 percent of bitcoin trades.
Since 2015, Japan has focused on responding to the growing demand for cryptocurrencies from the nation’s investors, and has imposed practical policies on the cryptocurrency market. It is in the best interest of the Japanese government, given its enthusiastic approach toward growing the country’s cryptocurrency industry, to cooperate with Binance and allow the exchange to operate as a regulated exchange.
Hence, in consideration of Binance’s track record of being in compliance with Japan’s regulations in all major regions, the Binance team will likely reach an agreement with the Japanese government in the mid term, which would be positive for Binance users, Japanese investors, and ultimately the Japanese cryptocurrency market.