Japan’s prime minister joined WebX 2023 to announce the country’s new commitment to Web 3 applications as well as reforms for the nation’s crypto regulations. The far-Eastern nation already has a solid set of regulations in place to accommodate a thriving crypto industry.
In the meantime, Binance, the world’s largest crypto exchange announced that it will be entering the Japanese market by acquiring an existing Japanese exchange. Binance has been struggling to maintain its survival in the Western markets due to legal issues in North America and a mass exit from the European market.
Prime Minister Fumio Kishida joined WebX to make a statement regarding the country’s commitment to crypto and other Web 3 applications. Kishida, during his speech, highlighted the potential for utilizing internet-based finances to facilitate an improvement in trade across the nation, stating that “Web3 is part of the New Form of Capitalism”.
In 2021, a Request for Notification of Originator and Beneficiary Information upon Crypto Assets Transfer was sent to the Japan Virtual Currency Exchange Association (JVCEA) from the Financial Services Agency (FSA). FSA stated that JVCEA should introduce self-regulatory rules regarding the crypto Travel Rule by April 2022. By April 2022, JVCEA managed to create a clear set of rules regarding crypto Travel Rule .
In December 2022, Japan’s Cabinet Secretariat introduced the Act on Prevention of Transfer of Criminal Proceeds (APTCP) to enforce the crypto Travel Rule.
As of June 1st of 2023, Japan applied the Travel Rule for crypto trade, which is a set of anti-money laundering (AML) guidelines.
Currently, The Financial Action Task Force (FATF) requires cryptocurrency exchanges, stablecoin issuers, some decentralized finance protocols, and non-fungible token marketplaces to undergo KYC checks and monitor suspicious activities.
Back in November of last year, Binance announced its takeover of JFSA-registered Sakura Exchange BitCoin in a move to enter the Japanese market.
“The Japanese market will play a key role in the future of cryptocurrency adoption. As one of the world’s leading economies with a highly-developed tech ecosystem, it’s already poised for strong blockchain uptake. We will actively work with regulators to develop our combined exchange in a compliant way for local users. We are eager to help Japan take a leading role in crypto,” reported Takeshi Chino, general manager of Binance Japan.
Hitomi Yamamoto, CEO of SEBC also stated that “We are honored and delighted to make this announcement with Binance, one of the world’s leading crypto asset exchange service providers. On top of our effort to prioritize user protection, Binance’s strong compliance system will contribute to building a more compliant atmosphere for users in Japan and help them access key crypto services needed for mass adoption in the future.”
However, the announcement also includes a rather ironic statement. At the time, Binance also announced its plans to receive regulator approvals in Italy, Spain, Bahrain, Abu Dhabi, Dubai, New Zealand, Kazakhstan, Poland, Lithuania, and Cyprus.
But, the company has so far managed to lose its footing all over Europe. Binance is now exiting the UK, Cyprus, Netherlands, Germany, and France. Considering the economic authority the aforementioned nations have in Europe, it is likely that Binance will completely exit the European market.
Moreover, Binance is in serious trouble in North America. The exchange is currently facing litigation from both the US Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
While Binance and its founder Changpeng Zhao are attempting to dismiss the lawsuit filed by the CFTC, it is truly the SEC Binance should be worried about.
The exchange is currently facing thirteen lawsuits filed by the SEC, USA’s regulating body for digital assets. The alleged charges include wash trading, commingling customer funds, and evading US regulators.
Signs even point toward a potential federal lawsuit to be filed against Binance and CZ, which the founder somewhat confirms by hiring a legal team made up of former SEC executives and former DOJ prosecutors.
Binance was originally based in China. The founder CZ is a Canadian Citizen of Chinese descent. As far as we know, Binance currently is not facing any regulatory trouble in its country of origin.
Moreover, Hong Kong is currently making a major push for crypto within its regulations, financial system, and overall payment economy.
With clear regulations put in place in Japan, including AML regulations that should safeguard investors and customers alike, far-Eastern markets may prove to be more accommodating to Binance.