The year 2021 was a rough regulatory one for Binance, the world’s largest cryptocurrency exchange, and the new year is off to a rocky start, with a stinging rebuke from regulators in Ontario.
The Ontario Securities Commission (OSC) on Dec. 30 bashed Binance in a statement for a notification Binance sent out a day earlier that indicated the exchange was allowed to operate there.
“Binance represented to OSC Staff that no new transactions involving Ontario residents would occur after Dec. 31, 2021. Binance has issued a notice to users, without any notification to the OSC, rescinding this commitment,” the OSC wrote in the statement. “This is unacceptable.”
The OSC reiterated that Binance is not registered under the securities law in Ontario, meaning it is not authorized to offer trading in derivatives or securities in the province.
In response to the OSC’s strong words, Binance on Dec. 31 said in a statement the Dec. 29 notice was “intended to communicate that Binance had decided to actively pursue registration in Canada and that Ontario users would not be required to close or liquidate their accounts on Dec. 31, 2021.”
Also on Dec. 31, Binance said it had a “constructive meeting” with the OSC to clarify its earlier notice.
A Binance spokesperson told Forkast.News that the Ontario saga was based on miscommunications.
“Unfortunately, there has been a miscommunication. Following discussions with the Canadian securities regulators about Binance’s intention to seek dealer registration in Canada, earlier in the week we notified users in Ontario that they did not need to close their accounts by Dec. 31, 2021,” Binance told Forkast.News in an emailed response. “It is our top priority to speak to the Ontario Securities Commission and will seek to remedy this misunderstanding as soon as possible.”
Meanwhile, Binance has received in-principal approval from the Central Bank of Bahrain (CBB) as a crypto-asset service provider, according to a Dec. 27 announcement. The in-principle approval from the Middle East kingdom still requires Binance to complete the full application process, “which is expected to be completed in due course,” Binance said.
“Recognition and approval from national regulators, such as the Central Bank of Bahrain, is essential to build trust in crypto and blockchain and help further improve mass adoption,” Changpeng Zhao (CZ), founder and CEO of Binance, said in the statement. “The CBB has been a progressive pioneer in developing a robust crypto-asset framework focusing on compliance with global standards of anti-money laundering, counter-terrorism financing, transaction monitoring, consumer protection amongst others.”
Binance’s latest move in Bahrain comes as a rare piece of good news as it has encountered regulatory woes in many jurisdictions over the past year. In December, Binance said its Singapore entity had withdrawn its application to the Monetary Authority of Singapore (MAS) for a license to operate a regulated crypto exchange in the country, while in the same month the company disclosed it was acquiring an 18% stake in Hg Exchange, a private securities exchange that has obtained a recognized market operator license by MAS.
On top of Singapore, similar regulatory actions have been taken in countries including the United States, Japan, Italy, Australia, the U.K. and South Africa. Also in December, Binance CEO Changpeng Zhao told the Sunday Telegraph that the company is working to rebuild its operations in the U.K. after it was told to close down its business there back in June.
However, the world’s largest crypto exchange seems to have some luck in the Middle East region. In early December, Binance announced a cooperation agreement with the Dubai World Trade Centre to “help advance Dubai’s commitment to establishing a new international virtual asset ecosystem.”
Not just with Binance, compliance has been on the minds of many crypto-related service providers around the world. “Naturally, given the nascency of crypto technology, one would expect a reasonably longer consultative process for regulatory approvals, particularly for larger companies with wider-ranging crypto-enabled financial services,” Christopher Chye, managing director of XREX Singapore and director of product of XREX Inc., told Forkast.News. XREX is a Taipei-headquartered crypto-fiat exchange and trade technology platform.
Chye said setting up physical headquarters is essential, as “a robust physical presence signals a commitment by companies to furthering their investment horizon, growing talent bench-strength, and creating sustainable success in the region.”
“For similar reasons, XREX has been increasing its investments into the local offices of strategically important jurisdictions such as Singapore, India and South Africa,” Chye said.
“You don’t necessarily need to be in the office to be productive,” CZ said. “And I think especially given Covid, it has shown that you could do productive work from home or anywhere in the world, especially with today’s communication technology.”