Latest News

Binance vows that it will remain in Europe despite a license setback

Binance, the crypto platform, plans to remain in 'the European Union, and will seek permission to operate there again, according to a senior executive. This is after Binance's application under a reformed?licence regime was rejected, which threatened access to millions of users. Gillian Lynch told? that Binance was not going to leave Europe after the failed attempt to obtain a license in Greece for the purpose of offering services like crypto trading within the EU.

She said, "We might just need to take a different route in order to be approved." "If Greece is not an option, I am looking at alternatives."

Binance is now on a collision course with European regulators. The company only has a week to obtain a license before the current permit to operate in Europe expires. This would force it to shut down its EU operations.

Binance, according to two people familiar with the process, has met with regulators from Ireland and Greece. However they have not been able to reach an agreement.

Officials expressed concern about the past money-laundering penalties of the company, its international structure, and what they perceived as a culture of risk taking.

The regulators in all three countries refused to comment or didn't respond.

The letters sent to regulators show how one of the largest crypto companies in the world has struggled with regulatory resistance and obtaining an EU license.

Lynch stated that Binance didn't know the reason for its rejection and had previously believed that the Greek regulator intended to grant a license. She stated that Binance contacted at least four regulators, but had only submitted one application to Greece. Binance's spokesperson said that the company has not been in contact with Ireland's central banks for several years.

Lynch, when asked about Binance's previous problems, said that Binance had invested heavily in compliance and internal control, had employed 1,500 compliance personnel, and did not have any outstanding issues relating to its application.

Regulatory Concerns

Binance's failure to obtain an EU license before the deadline of June 30 raises doubts about its future within the EU. The EU's new crypto regulations will be tested to see if authorities can enforce what amounts to a prohibition.

The European Securities and Markets Authority (ESMA) said on Tuesday that crypto firms without a license must "take immediate measures to wind up their EU activities in a timely manner".

MiCA (the EU's groundbreaking crypto regime) came into effect last year. Firms have until the end of June to get an authorisation to serve customers in all 27 member states.

Binance claims to have more than 300 millions customers worldwide, but has declined to disclose how many of those are in the EU. Sensor Tower estimates that the app was downloaded over 4 million times last year in the EU, with France, Germany, and Spain being the most popular downloads.

Sources who spoke on condition of anonymity said that regulators evaluating Binance's offer were also concerned with the backgrounds of senior executives, and the exchange’s track record in money laundering controls. They viewed these as being inadequate.

One source pointed to the influence and complexity of Binance's global structure, which was attributed to founder Changpeng Zhao. Zhao said in a podcast in February that he remained Binance’s ultimate beneficial owner.

Lynch told Zhao that Zhao was "100% removed from the company."

Binance struggled in the past to gain regulatory approvals elsewhere. Binance is not authorised in the UK, and it was asked to leave Japan for operating without a license. Its primary licence is in the United Arab Emirates.

Zhao, also known as CZ, pleaded guilty in 2023 to violating U.S. laws against money laundering as part of an $4.3 billion settlement after a year-long investigation. He spent nearly four months behind bars before being pardoned by U.S. president Donald Trump last year.

Binance, according to U.S. authorities, has violated anti-money laundering laws and sanctions laws by failing to report over 100,000 suspicious transactions that were linked to groups designated as terrorist organizations in Washington.

COORDINATION OF REGULATORS

MiCA allows crypto firms to?apply via a single regulator national and use this as a "passport". This will allow them to sell services throughout the bloc.

One source said that regulators in Latvia, Ireland, and Greece worked closely together to ensure "a consistent approach" to Binance’s application. Some regulators are concerned that inconsistent enforcement may undermine efforts to supervise a multi-billion dollar industry. They warn it could destabilise the markets, facilitate illegal finance, and harm investors if properly supervised.

Eleanor Hughes, Binance's general counsel, said that Binance believed it met MiCA requirements. While national regulators issue licences, ESMA can discuss applications. Reporting by John O'Donnell and Elizabeth Howcroft. Francesco Canepa, Lefteris papadimas. (Editing by Tommy Reggiori Wilkes. ElisaMartinuzzi, Mark Potter and Mark Potter.

(source: Reuters)