The Financial Services Agency (FSA) of Japan on Friday warned Hong Kong-based digital currency exchange Binance for operating without the necessary license in the latest attempt by the watchdog to strengthen rules in the digital currency space. The move confirmed a Thursday media report that a warning was forthcoming, which quickly pummeled the price of Bitcoin.
The FSA said the crypto exchange was doing online business in Japan without securing permission for it. In case Binance does not obtain a license, it would be liable to criminal charges.
The regulator has not set a deadline for the exchange to halt operations, Reuters was told by an FSA official.
No need to worry. Some negative news often turn out to be positive in the long term. Chinese have a proverb for this. New (often better) opportunities always emerge during times of change.
In a series of tweets, Binance chief executive Changpeng Zhao confirmed receipt of the FSA letter on Friday morning, adding that the company was working with the agency to resolve the issue.
Zhao said in his Twitter post:
"Our lawyers called JFSA immediately and will find a solution. Protecting user interests is our top priority.
Reactions to the warning came swiftly, and the price of Bitcoin slumped, falling as much as 4.5% after the report on Thursday. The cryptocurrency was down 0.2% at 9.31am in Hong Kong on Friday, according to Bloomberg.
The news also sparked fresh worries in the digital currency space. Participants are fretting that governments across the globe are stepping up their efforts to regulate cryptocurrencies by improving oversight to protect investors from fraud and prevent criminal activities such as money laundering and tax evasion.
Binance is one of the biggest cryptocurrency exchange operators in the world. News that Japan, one of the most active markets for digital assets, is taking special notice on the company is having an impact on Bitcoin and the virtual currency space as a whole.