- Binance transfers its Belgian clients to Binance Poland for crypto services after closing shop in the country
- Belgian financial regulators do not oppose the move but warn that the European crypto scene is underregulated
- Binance continues to face regulatory battles across many country while ceasing operations in others
Belgian crypto users and investors who used Binance as their crypto exchange have now been redirected to the Polish subsidiary of the exchange after the Belgian Financial Services and Markets Authority (FSMA) ordered Binance to cease operations in the country.
In a statement, Binance announced that Binance Poland, which was registered in January in compliance with Polish regulatory authorities, would offer crypto services to Belgian residents. By doing so, Binanace would have complied with FSMA’s requirements and regulations and would be legally offering services to crypto users in the country.
However, seeing as the entity is registered under the Polish regulatory standards for virtual asset service providers (VASPs), Belgian crypto users would be required to produce documentation in line with Poland’s Know Your Customer standards rather than Belgium.
This workaround is one of the many solutions Binance has had to come up with recently due to the myriad of regulatory hurdles the exchange has been facing in various jurisdictions. Aside from its legal issues with the US Securities and Exchange Commission(SEC), Binance has been working on regulatory concerns with the FSMA.
Earlier in June, Belgium’s financial watchdog claimed that Binance in its operations was in violation of the nation’s Anti-Money Laundering and Combating the Financing of Terrorism regulations.
As such, Binance was ordered to cease providing cryptocurrency exchange and custody wallet services to Belgian citizens. Binance was asked to give back all its customers’ crypto holdings and private keys in the custody of the exchange.
Instead of leaving its customers underserved, however, the FSMA recommended at the time that Binance might operate in Belgium through a “legal entity governed by the law of another member state of the European Economic Area [EEA] that is duly authorized by its home member state.”
This made Poland a suitable alternative given that it is a member of the EEA.
FSMA Warns of Underregulation in Poland
In response to Binance’s solution and new offering, FSMA said in a statement that there was “no obstacle” to operating via a Polish entity. However, the regulators stressed the limited powers Polish regulators had over the company.
“Within the EEA, the activity of provider of exchange services between virtual currencies and fiat currencies and of wallet custody services (Virtual Asset Service Providers, VASP) currently remains an unregulated activity, except as regards the prevention of money laundering and terrorist financing (AML),” FSMA said.
The Belgian regulators asked that the transfer to the Polish entity be made voluntary and in the event a customer does not consent to the transfer, Binance should provide a way to transfer to another exchange or Binance subsidiary within the EEA.
The financial watchdog also noted that the cryptocurrency market is still unregulated in Europe, with oversight limited to the fight against money laundering and terrorism financing, as the continent waits for the implementation of the Markets in Crypto-Asset (MiCA) law recently passed by the European Union.
“Binance Poland is not subject to any obligation other than those arising from the 5th Anti-Money Laundering Directive,” the FSMA explained. The MiCA law is expected to take effect in 2024 creating a consistent crypto regulatory environment throughout Europe.
In the meantime, Binance has been suffering a tough time in Europe. The exchange withdrew its licensing application in Germany in July because the nation’s financial watchdog was reportedly unwilling to grant its request.
In the same month, Binance also left the Netherlands after failing to secure a license to operate as a provider of virtual asset services there. As a result, the exchange transferred its Dutch clients to a local rival, Commerce.