The global largest crypto exchange Binance faces mounting regulatory pushback extending beyond the United States. The Changpeng Zhao-led crypto exchange faces increased regulatory scrutiny in various jurisdictions besides the high-profile charges initiated by the US Securities and Exchange Commission (SEC) early this month.
BaFin Reportedly Rejects Binance Bid for Crypto Custody License in Germany
The publication by Forward Finance indicated that Binance’s application for a crypto custody license was turned down by the German Federal Financial Supervisory Authority (BaFin). The move by the country’s financial regulator cited noncompliance with the strict requirements for firms seeking BaFin approval to offer custodial services.
The publication by Forward Finance disclosed that efforts to seek clarification from Binance regarding the news attracted reluctance to the conversation. The report indicates that the Binance executive turned down the request indicating an inability to disclose the content of conversations held with regulators.
Binance issued a summative assurance that it will continue working to fulfill the requirements disclosed by BaFin. The firm indicated that the process is a multistage activity and is ongoing. The firm dismissed speculations of facing pushback in Germany by expressing optimism in its team and measures to sustain its discussion with the regulators.
Binance Unable to Advertise in Germany
The comments from Binance harbors uncertainty on whether BaFin issued an official rejection of the crypto exchange bid to obtain a license. It is uncertain whether BaFin conveyed a verbal refusal over the same. Also, it is possible that the German regulator indicated it would later withdraw the license.
The reported refusal to grant a custody license prohibits Binance from advertising its services in the country. The German law stipulates that only licensed firms advertise within the country. Nonetheless, Binance would still retain its trading platform, which has 2 million users today.
The denial of license in Germany rounds up Binance’s struggles with regulators to reignite the 2021 escapades when over half a dozen countries served severe warnings. Binance’s recent run with the regulators outside the US threatens to erode its market share, already encroached upon by rival centralized exchanges and decentralized platforms.
Binance Faces Investigations in France
A review of recent events in the European market shows a mixed bag of success and failures amidst the heightened efforts to enforce the Markets in Crypto Assets (MiCA) regulations. Despite Zhao’s efforts to steer Binance into compliance with the MiCA regulations, it is suffering unfortunate regulatory pushback in several European countries.
Binance recently admitted to facing a preliminary investigation for alleged canvassing of clients illegally. The investigation extends to alleged involvement in aggravated money laundering in France. The investigation is a significant setback for a crypto exchange that planned to establish regional headquarters following its licensing in 2022. Binance is accused of engaging in the unauthorized practice for virtual assets service providers.
Binance Exits Netherlands Imminent as VASP License Denied
June is proving a difficult month for Binance after the Dutch regulator denied the VASP license. The regulator explained the dismissal of Binance’s application arose from its inability to satisfy the anti-money laundering (AML) guidelines.
Binance admitted exit from the Netherlands by issuing a one-month deadline that ends on July 17 for existing users to trade, withdraw and sell their assets. Beyond that day, it would suspend all services except withdrawals of assets from the Binance platform. It revealed all alternatives pursued to save the Netherlands operations turned futile in convincing the Dutch regulators.
Binance acknowledges that Europe is receptive to firms complying with the updated AML requirements. Binance is considered AML-compliant in France, Italy, Poland, Spain, Sweden, and Lithuania. As such, Binance announced its departure from Cyprus to prioritize compliance with MiCA in the mature European markets. It would announce a similar exit from the UK by withdrawing licensees granted by the Financial Capital Authority.
Belgium Authorities Issue Cease Order to Binance
Binance received a Friday, June 23 directive to cease operating in Belgium and serving Belgian customers immediately. The country’s regulator, the Financial Services and Markets Authority (FSMA), alleged Binance served customers beyond the European Economic Area.
The FSMA notice to Binance indicated that offering exchange and custody wallet services to nonresidents of the European Economic Area violates the prohibition. The prohibition pushes Binance away from the Belgian market.
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