Why Binance Is Abandoning Most of Europe
Crypto firms only need regulatory approval in one EU nation under new rules to serve all 27 in the single market – but some states are more prepared to implement MiCA regulation than others.
Binance’s options in Europe seem to be narrowing as evidenced by a recent string of withdrawals and rejections from local regulators.
With the EU’s crypto regulation MiCA set to take effect in the next year or so, the firm only needs to be licensed in one member nation to serve all 27.
But some countries like France and Germany are more prepared for MiCA than others, and which EU countries crypto firms choose for compliance will matter, legal experts say.
If recent headlines are taken at face value, it looks like Binance, the world’s largest crypto exchange, could be exiting Europe.
The exchange, having survived a wave of crypto collapses of 2022, is now facing regulatory pressure from all directions, with the U.S. likely to strike the greatest blow. U.S. prosecutors are weighing charges against Binance, while multiple regulators have filed suit against the company and its CEO Changpeng “CZ” Zhao. Zhao reportedly considered shutting down Binance’s U.S. unit in a bid to save the wider company.
Meanwhile, a string of rejections from EU regulators and voluntary withdrawals from several other markets gives the impression that Binance might be running out of options in Europe as well.
But with the EU’s new Markets in Crypto Assets (MiCA) regulation coming in, the exchange may simply be – contrary to Warren Buffet’s mantra on investing – putting all its eggs in one basket by focusing most or all of its efforts on compliance in fewer EU countries. And that just might be what it needs right now to succeed in Europe in the long term.
Companies looking to operate in Europe had to register or get licensed in each European jurisdiction, but that won’t be necessary when MiCA comes into effect in around 12 – 18 months.
“You have to apply for one license in one country. And then you get almost like a passport to provide your services across all 27 EU member states,” said Emilien Bernard-Alzias, partner at law firm Simmons & Simmons LLP.
EU’s single market.
Like other crypto exchanges, Binance also bet big on Europe, applying for licenses and registrations in several countries in an effort to serve as many markets as possible.
But recent developments – from being ordered to halt operations in Belgium, quitting the Netherlands after failing to get a license, giving up its registration with a Cyprus regulator, and withdrawing applications for regulatory approval in Austria and Germany – has seemingly narrowed Binance’s options in Europe.
The company has said its withdrawal from Cyprus was in preparation for MiCA coming into effect, and its efforts to focus on fewer European jurisdictions. Although it preemptively withdrew an application for approval in Germany following reports that a custody license was denied by the country’s financial regulator, BaFin, the company has said it still intends to apply for licensing in Germany.
At press time, Binance was registered with regulators in France, Italy, Lithuania, Spain, Poland and Sweden, according to its website. Of those countries, where Binance chooses to focus its resources on to become MiCA compliant may matter – and the exchange says it will be flexible to become a regulated entity.
“MiCA is a pragmatic solution to the shared issues that the industry and…
https://www.coindesk.com/policy/2023/08/10/why-binance-is-abandoning-most-of-europe/
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