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Binance Leaves Belgium and Mulls Russia Exit — More Regulatory Pressure to Come?

Published August 29, 2023 11:04 AM
Omar Elorfaly
Published August 29, 2023 11:04 AM

Key Takeaways

  • Binance Belgium clients are forced to use Binance Poland to register trades
  • The exchange is contemplating exiting the Russian market
  • Regulatory issues force the exchange to suspend key trade pairs

Binance still lists as the world’s biggest crypto exchange despite all the regulatory pushback the company has faced around the world.

Changpeng Zhao and his company are in a legal battle with the US Securities and Exchange Commission over allegations that pose serious threats to their futures.

Moreover, the exchange is struggling to keep itself tied to the European market as it continues to lose trading licenses in key EU markets.

In recent events, the company announced that its customers in Belgium may have to register with its Polish entity to continue to trade on the platform.

Binance is also considering pulling out of the Russian market as its banking partners in the country face sanctions from the US government.

New EU Issues

“The FSMA has noted that Binance is offering and providing exchange services in Belgium between virtual currencies and legal currencies, as well as custody wallet services, from countries that are not members of the European Economic Area.”

“On the basis of the general terms and conditions that apply to Belgian clients of the Binance.com platform, these services appear to be provided by Binance Operators that are not otherwise identified in the said contractual terms and conditions. There are apparently 27 such companies involved in the operational and/or technical aspects of the provision of these services, of which 19 appear to be based outside the European Economic Area.”

The above is the basis of the Belgian Financial Services and Markets Authority’s claim  against Binance upon which the regulating body issued a cease and desist against the exchange, back on June 23rd.

“The FSMA has therefore ordered Binance to cease, with immediate effect, offering or providing any and all such services in Belgium.”

Since Binance successfully registered its business with the Polish government, in accordance with its regulating body’s compliance terms, the exchange may surpass the issue posed by the Belgian government.

Since Poland is a member of the European Economic Area, Binance may continue to register customers from Belgium. The only caveat is that Belgian customers would potentially need to submit documentation in accordance with Know Your Customer (KYC) requirements for Poland rather than Belgium.

Binance did not immediately respond to a request for comment.

Binance May Exit Russia

Binance’s legal troubles in North America are not limited to ones posed by the US Securities and Exchange Commission (SEC). 

Following the proceedings of the Russia-Ukraine war, the US government posed sanctions against a number of Russian banks , among which are Tinkoff Bank, the second-largest credit card provider in the country, and Rosbank.

Unluckily for Binance, these two banks are among six financial institutions the exchange partners with to provide crypto trading services to Russian nationals.

As a result, Binance, along with ByBit and OKX ended their support for said sanctioned banks, effectively making it a lot more difficult for Russian nationals to trade cryptocurrencies on their peer-to-peer platforms.

“All options are on the table, including a full exit,” a Binance spokesperson told  Financial Magnates.

However, a few adjacent exchanges are choosing to approach sanctioned banks in a different manner.

Kraken, another popular crypto exchange, opted  to pay a fine of $362,000 to the US Treasury Department for allowing users in Iran to trade on its platform without implementing IP address-blocking mechanisms that ban specific geolocations from accessing the platform.

Further Troubles

Following the company’s ongoing legal battles with the SEC, the company was forced to announce halting liquidity pools of 39 trading pairs .

Starting September 1st, Binance will no longer allow customers to add to liquidity pools tied to BNB’s (the company’s native token) trade pairs with tokens such as Cardano (ADA), Polygon (MATIC), Bitcoin (BTC), Tron (TRX), Avalanche (AVAX), Polkadot (DOT), Filecoin (FIL), and Pepe Coin (PEPE).

Furthermore, the company will be forced to halt liquidity for trade pairs pools tied to Bitcoin and Ethereum.

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