Binance Never Been Authorised to Operate in Malta? It’s Been Two Years

The Maltese financial regulatory body has issued a public statement on Friday Feb. 21 denying the legality of Binance as a registered entity that is authorized to carry out crypto-related activities in Malta.

“…Binance is not authorised by the MFSA to operate in the cryptocurrency sphere and is therefore not subject to regulatory oversight by the MFSA”, the Malta Financial Services Authority (MFSA) states about the world’s largest cryptocurrency exchange by volume, as the island nation sought to distant itself from what the exchange has purportedly been doing over the time.

The MFSA’s statement will surprise some in the crypto space considering that Binance has been noted to have shifted base to the European country about two years ago. The exchange’s arrival was openly welcomed by top government officials and it has since been designated a “Malta-based” company for a while. For the financial regulator to now suggest otherwise is puzzling and points to irregularity from any of the parties involved. Yet, it seeks to correct the reference to Binance as a “Malta-based cryptocurrency” company by a section of the media. The Authority adds that it is, at this point:

“…assessing if Binance has any activities in Malta which may not fall within the realm of regulatory oversight. Admission of virtual financial assets to trading and/or for offering virtual financial assets to the public in and from Malta requires an MFSA licence in terms of the Virtual Financial Assets Act (CAP 590) of 2018.”

As at last month, there were talks of why Binance may leave Malta. The major reasons cited for this likely move include the recent ousting of the blockchain-friendly Maltese Prime Minister Joseph Muscat, and the newly-introduced Fifth Anti Money Laundering Directive (or 5AMLD) which took effect in Europe starting January 10, 2020. While the case of Muscat’s departure may not be as strong to warrant a move out of Malta, the 5AMLD – a broadening of the mandatory verification across Europe to include cryptocurrency platform users following the KYC and AML standards applicable to 4AMLD – has what it takes to make the crypto exchange rethink its operational strategy on the continent entirely.

Implementing these changes would greatly affect the exchange and its customers who could lose money or privacy depending on their state’s existing laws. With findings like Chainalysis’ 2020 Crypto Crime Report claiming that Binance reportedly allowed the withdrawal of large chunks of criminal-derived funds, the exchange is definitely going to face a shake-up in Europe. So it is no longer a question of whether Binance will move again – after China and Japan – but a matter of when and/or where to.

Reports have it that Binance has applied for a license to start operating from Singapore. According to Bloomberg, the exchange is looking to take advantage of Singapore government’s new legislation. The Payment Services Act came into force last month to, among other things, make Singapore be “among the first few financial services regulators in the world to introduce a regulatory framework for digital payment token services, or what are commonly understood as cryptocurrency dealing or exchange services.” Hopefully Singapore will be the exchange’s new home as there is a hint that the climate there, at the moment, is conducive and there are other exchanges – Liquid Group and Luno – planning to file a similar application.

MAS is blockchain-friendly. Last November, the regulator collaborated with J.P. Morgan and Temasek to lead the successful development of a blockchain-based prototype that enables payments to be carried out in different currencies on the same network. The prototype network is meant to help improve cost efficiencies for businesses and would likely be integrated with commercial blockchain applications after its industry testing to determine its ability.

The MFSA’s statement is the last straw that would break the camel’s back on the topic of where Binance is or will be based. It’s clear that Malta won’t be its operational base, as we know it, anymore – that is if it had been in the first place.

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