Binance, the world’s largest cryptocurrency exchange, has withdrawn its application for a license in Abu Dhabi as it faces increased regulatory scrutiny worldwide and re-evaluates its global structure.
The application was initially filed by Binance subsidiary BV Investment Management last year and took effect on November 15, 2022. The firm withdrew its request for a collective investment fund license from the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA) on November 7. The license would have allowed the firm to pool assets from multiple investors for collective management.
“When assessing our global licensing needs, we decided this application was not necessary,” a Binance spokesperson said. “Abu Dhabi has emerged as a leader in the virtual and digital assets ecosystem, a global hub that encourages innovation and responsible growth, while diligently guarding user interests.”
Binance also clarifies that its application for offering custody services, which was also submitted on November 15 last year, remains active and approved by ADGM. However, it reiterates that the terms of this approval restrict them from serving retail clients for custody services.
When asked about the availability of retail services in Abu Dhabi, Binance did not provide any definitive information on its current or future plans.
The news comes following the recent resignation of Binance founder Changpeng Zhao, who pleaded guilty to anti-money laundering violations. The company agreed to pay over $4.3 billion settlement with U.S. authorities and appoint an independent monitor to work with them for five years, “whose mandate will include review and assessment of Binance’s sanctions compliance program.”
However, the company insists the decision to withdraw the application is unrelated to the U.S. settlement.
The Binance spokesperson said the company intends to maintain its collaborative efforts with regulatory bodies across the Middle East and beyond, to provide world-class services and offerings.
The United Arab Emirates (UAE) has been a core market for Binance. According to its website, Binance has existing regulatory permissions in Dubai and actively contributes to shaping the region’s crypto regulations. Last year, it recruited over 100 positions in Dubai alone.
According to U.S. court documents, former CEO Zhao, a Canadian citizen born in China, has even obtained UAE citizenship by invitation. He also solidified his ties with the country by owning two properties in Dubai, as shown in public filings.
Binance’s new CEO Richard Teng, speaking virtually at a recent Financial Times conference in London, emphasized that the city serves as the company’s headquarters for the Middle East and North Africa (MENA) region. He also promised a future announcement revealing Binance’s global headquarters but offered no specific timeframe.
Complex regulatory global landscape
Apart from Abu Dhabi, Binance has navigated a complex regulatory landscape this year, withdrawing applications in Germany and Cyprus and exiting the Netherlands.
Binance said it is retreating from Cyprus to focus on streamlining its EU operations with “fewer regulated entities,” including France, Italy and Spain before new crypto asset regulations hit Europe.
It is also facing restrictions in Belgium, where it was ordered to cease operations. In response, Binance responded by establishing a Polish entity to continue serving Belgian clients.
Further scaling back its global footprint, Binance has closed its doors to new UK users and announced plans to sell its Russian operations. Australian regulators have also revoked the financial services license of Binance’s derivatives arm.
Binance is facing potential restrictions in the Philippines as well, where the country’s securities regulator initiated the process of blocking access to the platform last week.
It is not all bad news for the firm, however, as it has successfully launched its digital asset exchange in Thailand, with its platform, Binance.th, set to open for public access in early 2024.
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