Singapore cracks down on Binance

Singapore cracks down on Binance

Central bank says world's biggest cryptocurrency exchange lacks proper licence

(Reuters Photo)
(Reuters Photo)

Singapore has told Binance to stop offering services after a potential breach of local payment rules, adding to a mounting list of jurisdictions scrutinising the world’s largest cryptocurrency exchange.

Binance may be in breach of the Payments Services Act for providing payment services to, and soliciting business from Singapore residents without an appropriate licence, the Monetary Authority of Singapore (MAS) said.

As Binance didn’t apply for a licence under local law, the central bank has added Binance.com to the investor alert list, which warns consumers that Binance isn’t regulated or licensed to provide any payment services locally. 

The warning is the latest blow for Binance, which has grown quickly since its 2017 debut and doesn’t have a global headquarters. While Binance has also drawn scrutiny from regulators in the US, the UK, Thailand, Malaysia and Japan, many crypto bulls say tougher frameworks are a sign of market maturity. Offering more protection for investors, they say, could lure more money to digital assets. 

“MAS is likely to take a holistic view on the application and consider the fact that Binance (global) has been put on the investor alert list,” said Nizam Ismail, founder of Singapore-based Ethikom Consultancy, which advises firms on compliance and regulation. “Binance (global) would have to show that it has remediated any shortcomings and that it will not, going forward, solicit trades from Singapore resident customers.” 

Binance Holdings, which operates globally, has local affiliates in some countries including the US and UK — and in Singapore, with Binance Asia Services (BAS), which operates Binance.sg. BAS recently submitted a licence application, and is currently exempted from holding a licence for the provision of digital payment token services, according to the MAS. That application remains under review. 

The company’s Singapore operations are conducted by a separate legal entity from Binance.com, with its own local executive and management team, and does not offer any products or services via the Binance.com website or other related entities, and vice versa, Binance Singapore said in an emailed reply to Bloomberg.

Singapore isn’t the first country to take action against Binance. The UK banned the exchange from doing regulated business in Britain and Japan’s Financial Services Agency has warned it was operating without registration. In the US, it has been the subject of a probe by the Securities and Exchange Commission. 

Binance CEO Zhao Changpeng, a Canadian citizen, resides in Singapore and is the majority shareholder of Binance Asia Services. Vertex Venture Holdings Ltd, an affiliate of the state investor Temasek Holding, is also an investor in Binance Asia.

In Thailand, the Securities and Exchange Commission (SEC) filed a criminal complaint against Binance in July for illegally operating a digital asset business without a licence under the Digital Asset Businesses Decree.

The SEC had issued a warning letter in April requiring Binance to submit a written explanation for unauthorised advertisements and posts on its website and Facebook account soliciting the Thai public and investors to use its services.

However, Binance failed to submit a response within the specified time frame, the regulator said.

The SEC stressed only platform providers who have obtained relevant licences under the law are allowed to provide any service related to digital asset businesses.


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