Belgium’s Financial Services and Markets Authority (FSMA) has issued an order demanding Binance, the world’s largest cryptocurrency exchange, to halt all virtual currency services in the country. The regulator cited Binance’s violation of Belgian laws on Anti-Money Laundering and Combating the Financing of Terrorism by offering crypto-related services from countries outside the European Economic Area (EEA).
According to the FSMA, individuals, and firms governed in Belgium, but not members of the EEA, are prohibited from providing exchange services between virtual currencies and legal currencies or offering custody wallet services. Failure to comply could result in criminal sanctions, the regulator warned. The FSMA emphasized that Binance must immediately cease all such services within Belgium.
FSMA’s Concerns over Binance’s Compliance and Lack of Transparency
The FSMA’s notice stated that Binance was offering exchange and custody wallet services in Belgium from non-EEA countries, which raised concerns about compliance with regulatory requirements. The regulator noted that Binance had failed to provide satisfactory information regarding its non-EEA companies, which were involved in its operations or technical support and were not disclosed to Belgian users in the terms and conditions.
Despite multiple requests for information, Binance did not demonstrate, with proper documentation and proof, that its exchange services between virtual currencies and legal currencies, as well as custody wallet services in Belgium, were conducted by a legal entity authorized in another EEA member state. The FSMA expressed disappointment with Binance’s inability to substantiate its operations.
Binance did not dispute the regulator’s findings and expressed disappointment with the decision. A Binance spokesperson stated that they were reviewing the details of the FSMA’s notice and would continue to collaborate with regulators in Belgium and worldwide to ensure compliance.
This is not the first regulatory challenge for Binance, as the exchange is also facing scrutiny from U.S. regulators. Earlier this month, the Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO, Changpeng Zhao, alleging the operation of an unregistered exchange and misleading customers.
The FSMA’s order to cease virtual currency services adds to the growing regulatory pressure on Binance and highlights the need for exchanges to adhere to local laws and regulations. As regulators worldwide focus on ensuring investor protection and combating illicit activities, exchanges must address compliance requirements and provide transparent information about their operations.
