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Binance Ordered to Shut Down Operations in Japan

March 26, 2018

Binance, the world’s third-biggest cryptocurrency exchange by trading volume, has been ordered to shut down operations in Japan. Binance moved from Hong Kong to Japan last October after the Chinese government banned ICOs and shut down cryptocurrency exchanges. Binance will now move its operations from Japan to the Mediterranean island nation of Malta.

 

The Financial Services Agency (FTA), Japan’s financial watchdog, told Binance in a letter last week that it has been operating in Japan without a license, and that it is illegally allowing Japanese citizens to open accounts without confirming their identities. The FSA said that it is working with police and threatened Binance with criminal charges if it continues operations in Japan or fails to suspend services to Japanese residents immediately. Japan represents Binance’s second-largest user base by country and 7% of its trading volume.

 

Binance CEO Changpeng Zhao at first downplayed reports of the letter: “We received a simple letter from JFSA about an hour ago. Our lawyers called JFSA immediately, and will find a solution.” The next official statement from Zhao was an announcement that Binance was moving its operations to Malta.

Zhao later released this statement: “We are convinced that Malta will be the next hotbed for innovative blockchain companies and a centre of the blockchain ecosystem in Europe. Binance is committed to lending our expertise to help shape a healthy regulatory framework as well as providing funds for other blockchain start-ups to grow the industry further in Malta.”

 

Malta is a cryptocurrency-friendly jurisdiction that will allow Binance users to trade digital currency for hard currency for the first time.

 

Malta Prime Minister Joseph Muscat tweeted a welcome to the Binance, “Welcome to Malta. We aim to be the global trailblazers in the regulation of blockchain-based business and the jurisdiction of quality and choice of world-class fintech companies.” He later said in an official statement: “The concept of cryptocurrencies excites me as it strikes at the heart of a key philosophical element that economy students are taught at the beginning of their course. ‘Have any of you ever thought about what gives paper money its value when it’s ultimately just pieces of paper? The reason they have value is because society attributes value to them.’ Now some people, who in my opinion are geniuses, are arguing that value can similarly be attributed to virtual currencies...Financial services and iGaming companies invest in Malta because of our regulatory basis and our HR system, but also because of our imputation system of taxation. These blockchain operating companies don’t care about our taxation system but are coming to Malta, because of our innovative regulatory structure that will certainly be the first, and I think also the best, in the world.”

 

Silvio Schembri, Malta’s Parliamentary Secretary for Financial Services, Digital Economy & Innovation, stated that: “This is a clear vote of confidence in our country and the work being done in this sector, mainly by the latest policy launched to offer a regulatory framework of DLT operations. It is obvious that Malta has become a natural point of reference on the international sphere and companies such as Binance will continue to look into Malta to further expand their operations or establish a base. Binance’s presence in Malta sustains our vision, that of making Malta ‘The Blockchain Island.’”

 

Binance, which employs around 150 staff, generated $200 million profits from trading fees over the last three months.

 

The last big news on Binance was when it servers crashed in February, creating a firestorm of concerns that it was hacked (it wasn't).

 

Binance has not yet disclosed a timeline for opening the Malta office.

 

 

 

By: BGN Editorial Staff

 

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