According to the Maltese financial watchdog, Binance is not authorized to operate in Malta’s cryptocurrency sphere. That has sparked a conversation about Binance’s regulatory oversight.
That’s why it took many by surprise when the Malta Financial Services Authority (MFSA) claimed earlier this month that it has never approved the cryptocurrency exchange Binance to operate in the country.
On February 21, the MFSA issued a public statement, saying that Binance “is not authorized by the MFSA to operate in the cryptocurrency sphere.” The agency pointed to media reports referring to Binance falsely as a “Malta-based cryptocurrency firm,” and said the exchange “may not fall within the realm of regulatory oversight.”
Binance is not just another crypto exchange, but one of the leading worldwide crypto exchanges by trading volume. They should be based somewhere, shouldn’t they?
Where is Binance, if not in Malta?
In March 2018, Binance announced it was opening an office in Malta. That was soon after it clashed with regulators in Japan, where it had previously attempted to establish a presence. Today, however, it is not clear whether Binance still runs an office in Malta or where their headquarters is located at all.
Josh Goodbody, Binance’s Director for Growth and Institutional Business, is quoted on Coindesk saying, “As we run such a decentralized operation, there isn’t a clear answer for that – where we operate regulated businesses, we have teams based there.”
Late last year, after supposed Binance offices in China were raided by the police, Binance denied reports and said, “The Binance team is a global movement consisting of people working in a decentralized manner wherever they are in the world. Binance has no fixed offices in Shanghai or China, so it makes no sense that police raided on any offices and shut them down.”
Likewise, CEO Changpeng Zhao tweeted, “Office and HQ are old concepts like SMS and MMS. Time is moving on…”
Time may be moving on, but exchange customers still want to know that they are dealing with a legally compliant counterpart.
Additionally, the regulatory uncertainty comes at a time when Binance is also facing trouble on other fronts. There was a security breach in May, followed by wash-trading accusations later in the year. Just on February 19, there was another “unexpected technical issue” that forced Binance to halt trading.
Binance has no office or platform in Liechtenstein
In mid-February, we reported that the planned Binance branch in Liechtenstein would not go ahead. The project was initially announced in August 2018 with the goal of launching a regulated trading platform in Liechtenstein. At the same time, Binance had also reportedly wanted to launch a team of 10 to 15 in Liechtenstein. To-date, Binance has no official office in Liechtenstein either.
It remains to be seen how Binance customers will react. The MFSA also said in its announcement it was currently “assessing if Binance has any activities in Malta which may not fall within the realm of regulatory oversight.”