Japan has been extremely active regarding cryptocurrency regulations and has stepped up the regulations on all exchanges that allow cryptocurrency trading. This was the result of a series of attacks that led to the loss of millions of dollars’ worth of crypto assets and funds.
Japanese financial regulator, the Financial Services Agency (FSA) has since then been overlooking the crypto market very strictly. All cryptocurrency exchanges in the country have to register with the FSA in order to operate. This process can take up to six months to complete and requires stricter laws around both anti-money laundering (AML) and cybersecurity.
On January 15, an announcement on the largest crypto exchange Binance’s Japanese support website stated that the exchange is starting to restrict access to Japanese users. The announcement didn’t mention any date and simply stated that restrictions would be implemented gradually.
Japan is a major crypto hotspot in the Asian region and this was a blow for crypto enthusiasts in the nation as Binance provides a variety of investment options.
However, according to a press release on January 17, Binance has now begun negotiations with Z Corporation, a subsidiary of Z Holdings formerly known as Yahoo Japan and TaoTao, a Japanese licensed cryptocurrency exchange.
Changpeng Zhao CEO of Binance commented on the partnership stating:
“We are looking forward to our joint efforts with Z Corporation/TaoTao in bringing our services to Japan. Foremost, we want to ensure that we work in full compliance with Japanese laws and regulations where local and global standards function as a key role in establishing sustainable development industry-wide and greater public adoption.”
Details about the partnership are not yet disclosed but Binance said Z Corporation and TaoTao would “continue discussions and deliberations with Binance and begin preparation to launch trading services for users in Japan”.
The company further noted that the partnership would see all the parties working in collaboration with the FSA stating:
“Through licensing Binance’s cutting-edge technologies, Z Corp and TaoTao will collaborate with the Financial Service Agency to ensure full regulatory compliance in the Japanese market.”
This partnership will enable Binance to enter the Japanese market offering trading and crypto services in a fully regulated environment.
Regulations remain tight
Japan hasn’t been too kind to the crypto exchanges as severe restrictions are in place. Quite recently, Japan’s financial regulator, the Financial Services Agency (FSA), has laid down plans to introduce a rule limiting the leverage in cryptocurrency margin trading to twice the deposits of traders.
According to FSA, the new regulations will go a long way in combating crypto volatility in cryptocurrency markets, which usually amount to significant financial losses.
When the new rule takes effect, cryptocurrency exchange operators are expected to be pressured to change their business models as per the new regulations. This may lead speculative traders to lose interest in cryptocurrency margin trading, probably due to reduced profit margins.
Back in March 2018, after the CoinCheck hack, the watchdog sent “punishment notices” to as many as seven crypto exchanges and temporarily froze the activities of two more after a round of inspections. Since the amendment of Japan’s Payment Services Act in April 2017, all crypto exchanges in the nation are required to register with the FSA.
In recent times, Japan seems to have changed its stance on cryptocurrency. The country has implemented some permissive regulations to foster crypto growth and, at the same time, closely monitor crypto exchanges. How this benefits its thriving crypto industry is yet to be seen.