The world’s largest cryptocurrency exchange has pulled out of yet another country under fire from regulators.
Binance, far and away the world’s largest exchange by volume, announced late Sunday night (Dec. 12) that it will stop offering crypto trading services on Binance Asia Services, its Singapore affiliate. No more deposits or new customers are being accepted, and clients will have to close accounts by Feb. 22, Binance Singapore said.
Read more: Binance Asia Withdraws Application for Singapore Crypto Bourse
Binance Singapore had been operating under a temporary exemption while it applied for a license, but moved to withdraw that application.
On Twitter, CEO Changpeng Zhao said the withdrawal came after the company “made a sizable investment into regulated exchange HGX last week. This investment made our own application somewhat redundant.”
Clarification. Binance made a sizable investment into regulated exchange HGX last week. This investment made our own application somewhat redundant. We will continue to work through our partners to grow the crypto industry in Singapore. Onwards.https://t.co/D9oywGEavV
— CZ 🔶 Binance (@cz_binance) December 13, 2021
Building a home
Until recently, Binance was widely reported to be looking at Singapore as its global headquarters. The company has never had a formal headquarters, something that its billionaire CEO Zhao had called unnecessary.
That changed on Aug. 20, when the company announced a push for regulatory compliance around the world, beefing up its anti-money-laundering (AML) requirements for customers.
Binance has “chosen to go with full compliance, full mandatory KYC for global users, for every feature,” Zhao said at the time, PYMNTS reported. “We feel that being compliant will allow more users to use us. Most people do feel more comfortable using a licensed exchange.”
See also: Binance CEO: KYC Mandate Causes 3% of Users to Leave
The next month, Zhao announced that the decentralized company would build a headquarters, telling the South China Morning Post, “As we run a centralized exchange, we have come to realize that we need to have a centralized entity to work well with regulators. We need to have clear records of stakeholders’ ownership, transparency and risk controls.”
Annus Horribilis
The push for a permanent home came as Binance found itself under fire throughout the world, including the U.S., Europe, and many parts of Asia. It has still not announced a location.
Regulators in the U.K., Italy, Japan, Thailand, Malaysia, the Cayman Islands and the Canadian province of Ontario have all accused Binance of operating illegally in their countries this year.
See here: Months After Ban, Binance Renews Focus on UK Launch
Binance also found itself under investigation by the U.S. Commodity Futures Trading commission (CFTC) in March and the U.S. Department of Justice and Internal Revenue Service (IRS) in May.
In November 2020, it booted U.S. customers, creating the independent Binance US in September 2019.
More here: UK FCA Warns Consumers: Binance Crypto Exchange Is Banned From Regulated Activity
Germany’s financial supervisor BaFin in April accused Binance of breaching its securities laws with the launch of stock tokens, which offered fractionalized stock purchases. In July, it canceled the product. It also discontinued futures and derivative trading in Germany, Italy and the Netherlands, and had to halt payments on the European Union’s Single Euro Payments Area (SEPA) network that month.
Beyond that, Binance ended trading and payment support for the South Korean won, as well as Korean language support in August, a month after authorities there issued a general warning to cryptocurrency exchanges to register in compliance with AML laws or face possible criminal charges.
And of course it heightened efforts to exclude Chinese customers in September, after the country banned crypto trading outright.
Setting an example
Binance’s troubles come as the U.S. joins other European and Asian countries in stepping up its enforcement of crypto trading broadly.
The company’s troubles may stem from, or at least be exacerbate by, its size. Binance had a 24-hour trade volume of $18 billion on Dec. 13, followed by OKEX at $5.9 billion and Coinbase Exchanges at $4.1 billion. That puts it a position of being seen as the top offender in any broad cryptocurrency regulation push. It also makes it a very good subject which authorities can use to set an example.
Also read: Regulatory Agency Turns Attention to Exchanges, SEC’s Gensler Again Calls Crypto ‘Wild West’
Speaking at a conference on Sunday (Dec. 12), SEC Chairman Gary Gensler warned exchanges that they were in the agency’s crosshairs, saying “these platforms are doing a lot more than just trading, they’re also holding the crypto tokens. They’re also sometimes trading against their customer base. And they’re set up technologically differently than traditional stock exchanges.”
Gensler, who taught a course on cryptocurrency and blockchain at MIT immediately before taking up the reins at the SEC, reiterated his position that crypto is the “Wild West” of finance.
We’re always on the lookout for opportunities to partner with innovators and disruptors.
Learn More