Reports that Japanese authorities are planning to shut down Binance is once again shaking the cryptocurrency market. Nikkei reports that the Financial Services Agency is planning to bar Binance, one of the largest cryptocurrency exchanges in the world from operating in the country citing unnamed officials.
Reports indicate the exchange has been operating in the country without a license. Based in Hong Kong, Binance has been moving some of its operations to Japan after Chinese authorities cracked down on cryptocurrencies. Binance maintains a large pool of staff there.
CEO Changpeng Zhao tweeted that the company was in dialogue with the FSA although he took issue over the apparent leak of the impending shutdown.
The Financial Services Agency has been coming down hard on exchanges in recent weeks, sending jitters in the cryptocurrency community. The body penalized at least seven exchanges earlier this months for various reasons including inadequate controls. Two exchanges were suspended for a month for inadequate controls. Japan has one of the most active markets and accounts for a sizeable portion of all cryptocurrency trading.
Officials attending the G20 summit have raised concern about the possible use of cryptocurrencies for money laundering and to finance terrorism.
The exchange was launched in 2017 has seen tremendous growth to become one of the world’s largest cryptocurrency exchanges in its relatively short existence. Binance has a market cap of well over $2B according to CoinMarketCap. The 24 hour volume at 13.32 UTC stood at $1,834,201,026, the largest in the world.
Binance is also developing its own public blockchain for its decentralised exchange (DEX).
The crypto-to-crypto only exchange is hugely popular for its diverse coin offerings and impressive transaction speeds. Binance is also available in many languages and therefore has more reach.
Lesser known coins usually start their life on the exchange before being listed in more established ones.
Bitcoin is now trading below $8,700 in the wake of the damaging reports. Alternative coins like Ethereum, Ripple, Bitcoin Cash and Bitcoin Classic are also losing gains made earlier this week. The market rallied since Sunday after generally positive comments in the lead up to and during the G20 Buenos Aires summit.
A meeting of central banks governors and ministers generally struck a positive note about cryptocurrencies and the underlying blockchain technology although calls were made for better regulation.
Increased regulatory scrutiny across the world has been rattling the markets for much of this month. The full effect of the shutdown when it happens remains to be seen.
Japan has put in place a licensing system for cryptocurrency exchanges in an effort to enhance its oversight role.
Binance had earlier this year announced there were plans to acquire a license but it is not known how far they went. At least 16 exchanges are licensed to operate in the country.
In 2014, Mt Gox, the largest cryptocurrency exchange based in Japan was hacked occasioning a loss of 850,000 Bitcoins then estimated to be worth $450 million. The exchange filed for bankruptcy thereafter but the effects of the attack are still being felt.
A recent Bitcoin dump by the trustee started a domino effect that saw Bitcoin prices fall sharply in February.
Coincheck, a Japanese exchange was also recently hacked in January.
Authorities have since been keen on preventing the same scenario from happening. Services including trainings and consultancies are heavily regulated.
Bitcoin has since lost 4% of its value while Ethereum and Ripple have lost at least 6%. Litecoin has lost 4.6% while Cardano has seen about 10% of its value shaved off. Binance’s native token BNB lost 10% after the news filtered in but has since recovered.