Starting with UK, Binance is now being barred from several countries from performing any “regulated activity”.
This year Binance has had a rollercoaster ride with regulators in several countries.
Last week Lithuania’s central bank issued a similar warning for “unlicensed investment services.”
Friday saw Hong Kong’s Securities and Futures Commission (SFC) issuing a warning to Binance for distributing stock tokens without prior approval. Italy too joined the league.
Binance is now facing regulatory crackdowns in 11 countries for different reasons discussed below.
The central bank of Lithuania has notified digital assets exchange Binance, UAB, and “ordered to ensure that its publicly available information is not misleading.”
In Lithuania, virtual exchange operators are not allowed to provide financial services, including investment services. To do so requires a license(s) that Binance does not possess.
In Hong Kong as per the SFC warning “Stock Tokens are are likely to be ‘securities’ under the Securities and Futures Ordinance (SFO) and if so, they are subject to the regulatory remit of the SFC.” Distributing them without the SFC’s authorisation or registration is an offence. SFC holds that no entity in the Binance group is licensed to carry out any “regulated activity” in Hong Kong.
Italy’s financial regulator, Commissione Nazionale per le Società e la Borsa (Consob) has warned Binance that it is not authorized to provide investment services and activities in Italy. Consob has also cautioned investors that since crypto markets are unregulated and prone to scams, malfunctions, and cyberattacks, they can lose their investments due to the risks and volatility with no recourse available.
For long it was believed as the home to Binance’s parent, but it too cleared the smoke when Cayman Islands Monetary Authority (CIMA) asserted that “Binance, the Binance Group and Binance Holdings Limited are not registered, licensed, regulated or otherwise authorised by the Authority to operate a cryptocurrency exchange from or within the Cayman Islands.”
However, Binance does have a trademark registered in the Cayman Islands.
CIMA became suspicious after several press reports of Binance being registered at the Cayman Islands were published.
Recently, the Thailand Securities and Exchange Commission (SEC) filed a criminal complaint against Binance for operating in the country without a license. Binance had been operating under the class of digital asset exchange which requires a license from the financial regulator. Earlier the commission had written a letter to Binance on April 5 warning it but received no response which resulted in the complaint.
WazirX, the Binance affiliate in the country, had been served with a show-cause notice by Enforcement Directorate (ED) for money laundering activities being carried out on its exchange. ED held that WazirX violated the foreign exchange laws involving crypto-currency transactions worth INR. 2790.74 Crore. 2790.74 Crore.
The Financial Conduct Authority (FCA) in June had ruled Binance Markets Limited to stop its operations in the UK as it does have the required license(s). It culminated in Clear Junction, a payments processor, suspending both Pound Sterling and Euro payments. Barclays and Santander too suspended card payments to the platform.
In April BaFin stated that it has grounds to suspect Binance Germany GmbH & Co. KG and fine it for offering security “share tokens” without first publishing an investor prospectus. Binance had said it would offer tokens denominated in the exchange’s cryptocurrency giving investors exposure to MicroStrategy Inc., Microsoft Corp., and Apple Inc.
The Financial Services Agency (FSA) issued a caveat to Binance Holdings Limited. That it is not registered to do business in Japan. It had been issued a similar warning by FSA in March 2018.
Bloomberg reported in May that Binance was under investigation by the Justice Department and Internal Revenue Service for being used to launder money and carry out illegal trades. The report cited a Chainalysis Inc. forensic report that concluded more funds tied to criminal activity flowed through Binance than any other crypto exchange.
Polish Financial Supervision Authority (PFSA) has held that Binance, whose primary business is “is brokerage in the exchange of cryptocurrencies and crypto assets.”, is not regulated. PFSA has cautioned the investors or traders using the services of Binance group entities as it may involve “significant risk”.
Some other regions and countries also have been tightening their grip on cryptocurrency exchanges like the province of Ontario in Canada. Binance exited that province due to increasing pressure.
Earlier this month Bloomberg reported that the Monetary Authority of Singapore (MAS) has been closely following Binance’s global cat and mouse game. Binance Asia Services Pte, Binance’s local subsidiary, has a grace period during which it can operate in Singapore while its application for a license to provide digital payment token services is under review.
Binance’s laxed KYC norms are possibly a reason of suspicion from authorities.
Many issues are arising because nobody knows where the parent company is based at. Binance has multiple entities under its umbrella. Every country where it operates has its local subsidiary. Binance has maintained that it is a decentralized organization.
Despite the regulatory warnings, Binance’s CEO maintains that they are compliant and on track for growth in his recent tweet thread on four years of Binance.
Binance, one of world’s largest cryptocurrency exchanges, currently home to millions of crypto users, seem to be a target for all countries, or is it a necessary steps the regulators are taking? What do you think? Let us know, join the chat with other crypto lovers like yourself on our telegram group.