The largest cryptocurrency exchange in the world, Binance, has withdrawn its application for a crypto license in Germany. The German Federal Financial Supervisory Authority (BaFin) advised the exchange to withdraw its application out of concern for its CEO, Changpeng Zhao, and the organization’s structure, according to The Wall Street Journal.
BaFin’s guidelines for a license application state that managing directors must “have the required professional qualification and be of good repute to manage an institution and must dedicate sufficient time to performing their functions.” The regulator reportedly expressed concerns that Zhao, also known as “CZ,” may not have passed a “fit and proper” test under these guidelines. Furthermore, BaFin also raised concerns that Binance’s company structure could hinder regulatory supervision.
This update comes on the heels of Binance’s disclosure on July 26, 2023, that it had retracted its application in Germany. The exchange cited its ongoing efforts to align with the European Union’s Markets in Crypto-Assets (MiCA) framework as a partial reason for this decision.
Beyond the apprehensions raised by the German regulator, Binance is also grappling with legal proceedings initiated by the United States’ Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These proceedings are due to alleged breaches of securities laws and trading regulations. In response, Binance has sought to dismiss the CFTC lawsuit, contending that the commission has overstepped its jurisdiction.
Binance’s regulatory issues are not limited to Germany and the United States. The exchange has recently withdrawn license applications in Austria, the Netherlands, and Cyprus, and lost its partnership with European banking partner PaySafe. It also faces an investigation by French authorities accusing it of “acts of aggravated money laundering.”
Despite these challenges, Binance maintains its commitment to regulatory compliance. The exchange has stated that it still intends to apply for appropriate licensing in Germany and plans to fully comply with the European Union’s MiCA legislation, set to be implemented next year.
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