Problems in Europe for the crypto exchange Binance

The world’s largest crypto exchange, Binance, is having problems in a couple of European countries. 

With next year’s arrival of the new crypto regulation (the so-called MiCA) in the European Union, the requirements for crypto operators are becoming more stringent, which is perhaps why such problems are popping up only now. 

Binance: the withdrawal from the Netherlands of the world’s largest crypto exchange

This morning, Binance made it known in an official tweet that it intends to withdraw from the Netherlands. 

The exchange says it is leaving the Dutch market because it has been unable to register as a VASP with the local regulator.

It also mentions the MiCA in the tweet, saying that they are focusing on preparing the business to be fully compliant with the new EU regulations. 

So with immediate effect they are no longer accepting new users residing in the Netherlands, and as of 17 July all Dutch users will only be able to withdraw assets from the platform.  

Effectively Binance is closing in the Netherlands. 

The problem is that it has not obtained full registration as a Virtual Asset Service Provider (VASP) from the Dutch regulator, although it has tried. 

It is worth mentioning that the Dutch regulations are currently among the strictest in Europe regarding virtual assets. 

However, Binance recalls that it is compliant with EU standards on the prevention of money laundering and terrorist financing, and that it has obtained registration in other countries instead (France, Italy, Spain, Poland, Sweden, and Lithuania). 

It is therefore probably just a matter of choice, i.e., abandoning the attempt to obtain registration as a VASP because it might not have been convenient. 

The investigation in France

The problems in Europe for the crypto exchange are not over

In fact, according to rumors from the Paris prosecutor’s office, Binance is reportedly under investigation in France for aggravated money laundering.

The exchange is allegedly suspected of having had poor anti-money laundering controls in the past, and of illegally providing services related to digital assets linked to acts of aggravated money laundering. 

The facts relate to before Binance obtained official approval to operate in France as a virtual asset service provider (PSAN), but the charges remain serious.

The Paris prosecutor’s office said that the ongoing investigation involves illegal activities related to investment and concealment operations, but mainly to virtual asset exchanges made by perpetrators that generated profits. 

Le Monde reported that Binance is suspected of having failed in its obligations related to KYC (user identity verification), which is why it allegedly found itself providing its services to perpetrators of crimes. 

Therefore, the charge is one of negligence, and it refers to events that took place more than a year ago. 

Binance’s sustainability

For now these problems, including the SEC lawsuit in the US, are not jeopardizing the sustainability of the exchange. But many are still asking questions about what impact they may have in the medium term. 

Indeed, if these problems with the authorities were to translate into heavy negative legal, or even economic, consequences, would the exchange be able to cope? 

The US and European markets are two of the largest crypto markets in the world, and it is not necessarily the case that Binance can survive on the back of the Asian market alone. 

That is why there are those who advise against leaving their funds in custody on Binance, or any other custodial wallet such as those on centralized exchanges. 

For now it is effectively exiting the US market, while in Europe it has only abandoned the small Netherlands. But if it were forced to abandon France as well then the consequences could begin to be significant. 

And should fines with large sums then be forthcoming, there’s a risk that they will end up weighing heavily on the company’s accounts if the crypto market has not yet recovered. 

However, the fact remains that for now the exchange shows no weaknesses from a financial point of view, and it does not seem to have any problems meeting all withdrawal requests. 

What’s more, its Binance (BNB) coin is actually slightly gaining in the markets today after sharp declines in recent days.