Binance Japan, which launched on August 1, 2023, has intensified competition in the country's already crowded cryptocurrency market. Offering a significant number of 34 cryptocurrencies, the entry of Binance Japan poses a challenge for smaller exchanges, many of which offer as few as one to five tokens.
By the end of August, there were 29 registered cryptocurrency exchanges in Japan. The global crypto downturn has exacerbated liquidity issues and a lack of differentiation among these smaller exchanges. Norbert Gehrke, founder of the Japan FinTech Observer newsletter, believes that Binance's entry has hastened their decline.
In a strategic move to expedite its official entry into Japan, Binance acquired the Sakura Exchange BitCoin platform in November 2022. This acquisition allowed the company to transfer its Osaka-region registration to Tokyo, marking a part of a wider industry expansion effort toward the Asia Pacific region.
However, Binance Global's legal issues overseas have raised concerns. In the U.S., both the Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC) have charged Binance with operating as an illegal exchange. Investigations are also ongoing in Australia, France, and Brazil.
Despite these challenges, Japan’s Prime Minister Fumio Kishida views nationwide adoption of Web3 technologies as a key growth strategy. Tatsuo Oku from the Blockchain Collaborative Consortium hopes that Binance's entry will spark interest in the nation’s Web3 industry.
Justin Dhingra from Crypto Garage notes an oversaturation in the number of retail crypto exchanges compared to demand, with only around three really making money. Coincheck, a successful Japanese exchange, has diversified its services to include an NFT marketplace to leverage the country's strengths in video games, anime, and manga.
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