Binance Dodges Regulatory Bullet in Belgium, Redirects Users to Poland

<p>Binance,
the world’s largest cryptocurrency exchange by trading volume, has opted to migrate its users in Belgium to its Polish subsidiary rather than quit the Western
European country. In late
June, the Belgian financial markets watchdog ordered the exchange to immediately shut down its crypto exchange and custody
services in the country as it was serving Belgian users from
outside the European Economic Area (EEA).</p><p>Binance
Brings Belgian Users under Polish Branch</p><p>In the order, the Financial
Services and Markets Authority (FSMA) <a href="https://www.financemagnates.com/cryptocurrency/fsma-orders-binance-to-immediately-halt-services-in-belgium/" target="_blank" rel="follow">identified 27 companies or ‘Binance
operators’</a> it said were helping to prop the exchange’s services in Belgium by offering
technical and operational support. However, Binance was not
able to demonstrate, despite multiple
queries, that 19 of these so-called operators are actually located within the
EEA and have domestic legal backing to provide such services in Belgium.</p><p>As a
result,<a href="https://www.financemagnates.com/cryptocurrency/fsma-orders-binance-to-immediately-halt-services-in-belgium/" target="_blank" rel="follow"> FSMA ordered Binance</a> to return all customers’ crypto holdings and keys.
However, the regulator gave the exchange the option of transferring its Belgian users to entities
regulated under the law of an EEA member state. It pointed out that such firms
must be authorized by domestic laws in their countries to carry out crypto
exchange and custody services, including within Belgium. </p><p>Today (Monday), Binance announced that it will continue to serve Belgian users by migrating them to
Binance Poland sp. z o.o. The move enables the business to meet its local regulatory
requirements in Belgium, Binance said, adding that
the Polish subsidiary
is registered as a virtual assets service provider in Poland and can, therefore, provide crypto exchange and
custodian services.</p><p>“Belgian
users can continue using the Binance platform by accepting the Terms of Use of
Binance Poland for Belgian users,’ the exchange stated in <a href="https://www.binance.com/en/blog/ecosystem/binance-continues-to-serve-belgian-users-8435767371921116777" target="_blank" rel="follow">a blog post</a>. “We may also ask users to
resubmit some of the required know-your-customer (KYC) documentation in order
to comply with Polish regulatory requirements (details to be provided to
affected users).”</p><p>FSMA
Responds to Binance</p><p>In <a href="https://www.fsma.be/en/news/fsma-press-release-regarding-binance" target="_blank" rel="follow">a separate statement</a> released on Monday, FSMA
acknowledged Binance’s decision to begin to serve its Belgian customers through
its Polish entity. However, the regular noted that only users who agree to work
with Binance Poland must be onboarded. Others, if they
agree, can be
transferred to another authorized subsidiary within the EEA.</p><p>Moreover,
the Belgian watchdog pointed out that while Europe awaits the implementation of
the Markets in Crypto-Asset (MiCA) <a href="https://www.financemagnates.com/cryptocurrency/european-parliament-approves-landmark-crypto-law-mica/" target="_blank" rel="follow">recently
passed by the European Union</a>, the crypto industry remains unregulated in
the continent, with oversight limited to the prevention of money laundering and
terrorist financing. </p><p>“Binance
Poland is not subject to any obligation other than those arising from the 5th
Anti-Money Laundering Directive,” FSMA explained. “In application of that
Directive, Binance Poland is registered with the Polish Ministry of Finance.
The registration is not, as in many other EEA countries, subject to prudential
requirements or an examination of the fitness or propriety of the directors or
senior managers of the entities applying for registration.”</p><p>Tough Time in Europe</p><p>Binance’s
effort to comply with Belgium’s regulator’s requirements comes as the exchange is <a href="https://www.financemagnates.com/cryptocurrency/payment-processor-woes-lead-binance-to-limit-european-transactions/" target="_blank" rel="follow">facing
a rough patch in Europe</a>.
In July, the exchange <a href="https://www.financemagnates.com/cryptocurrency/binance-drops-license-application-in-germany-amidst-regulatory-challenges/" target="_blank" rel="follow">dropped its license
application in Germany</a> the watchdog was reportedly unwilling to grant the license. </p><p>Additionally,
the exchange <a href="https://www.financemagnates.com/cryptocurrency/binance-to-transfer-dutch-clients-to-local-rival-coinmerce/" target="_blank" rel="follow">quit the Netherlands in
July</a> after it failed to obtain a virtual asset
service provider license in the country. However, it transferred its Dutch customers to a local rival, Commerce.</p><p>Similarly,
Binance <a href="https://www.financemagnates.com/cryptocurrency/binance-seeks-to-deregister-subsidiary-in-cyprus/" target="_blank" rel="follow">applied for
deregistration in Cyprus</a> in June. However, a spokesperson for the exchange
said the company decided on the move in order to focus on "fewer
regulated entities in the EU."</p><p>

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This article was written by Solomon Oladipupo at www.financemagnates.com.