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Japan’s Financial Services Agency (FSA) issued a warning to crypto exchange Binance, indicating that the exchange was operating in the country without registering with the regulator. The validity of the notice has been confirmed by a source close to the matter.
In 2017, the FSA began a registration process in Japan that required crypto companies to file with the regulator in order to continue operating.
The move was a reaction to a number of hacks and incidences of ill-equipped teams managing crypto businesses, specifically exchanges. The fall of Mt.Gox in 2014 is perhaps the most memorable, but another report revealed that over $500 million was lost to hacks in the first half of 2018.
Today’s warning is Binance’s second from the FSA. The first was issued in 2018, after which the exchange moved its operations to Malta (before again moving to the Cayman Islands).
It now appears that users located in Japan are still able to access the site and make trades. Binance has not yet responded to inquiries from Decrypt on the matter.
Changpeng “CZ” Zhao, the company’s CEO, told Decrypt that Binance does not have a formal headquarters during this year’s Ethereal Summit.
Binance’s brushes with regulators
The cryptocurrency exchange is the largest trading platform in the industry by volume. This title hasn’t come easy, however. Binance has often been the center of several regulatory duals around the world.
In 2020, the Malaysian government issued a similar warning to that of Japanese regulators, stating that the exchange was operating illegally. In the United States, the stakes have been much higher. Reports from earlier this year indicated that the Commodity Trading Futures Commission (CFTC) was investigating Binance for allowing U.S. citizens to trade derivatives without registering with the CFTC.
Binance has been hard at work to ease its regulatory complications too. In April, the company hired the former acting Comptroller of the Currency (OCC), Brian Books to lead Binance.US, the exchange’s U.S.-based entity.
Whether the latest warning from the FSA will halt Binance’s operations remains to be seen. But given the platform’s history, this notice will likely have little effect.