In a recent Securities and Exchange Commission update, the largest crypto exchange by daily trading volume, Binance, revealed plans to exit Cyprus. The market regulators confirmed that Binance had submitted the documents to be deregistered as a crypto service provider.
The Binance submission, currently under regulatory review, came days before Markets in Crypto Assets (MiCA) was implemented in the European Union. The regulators project that by 2024 the MiCA rules will be passed into law.
Binance Set to Exit Cyprus
The MiCA regulations outline the requirement that virtual assets service providers (VASP) in the European Union ought to comply with. The new regulations subject the VASP to tighter regulations in stablecoin issuance, data security, and anti-money laundering rules.
On October 22, the Cyprus regulators approved the Binance class 3 registration for crypto assets service provider (CASP). In a statement, Binance confirmed the regulatory approval for the CASP was a significant milestone for the crypto exchange to establish a mature footprint in Europe.
Per the Cyprus registration, a class 3 registration is considered a high-profile service provider in the region. Once a firm receives the class 3 registration, the crypto exchange can provide custodial services and manage portfolios and trading platforms.
At that time, the Cyprus regulators had listed nine crypto firms under the CASP category. Under the regulators’ list, Binance, eToro, Revolut, Gemini, and Crypto.com are listed as CASP.
In a subsequent statement, the Binance team revealed plans to pursue markets within the EU with less regulated entities. The Binance group expressed optimism to continue operating in large registered markets such as France, Spain, and Italy.
Impact of the Implementation of MiCA Regulation
In a subsequent report, the Binance spokesperson stated that the crypto exchange would pursue ways to comply with the MiCA regulation. In his report, the spokesperson failed to clarify why Binance plans to deregister with Cyprus.
A close examination of the Binance website illustrated that the crypto exchange operates in 100 countries. On the list, the Binance team has excluded Cyprus.
A few months ago Binance team confirmed to exit Canada due to regulatory pressure. Recently the Canadian regulators issued a report outlining the new stablecoin and crypto regulations.
Following the announcement, the Canadian Ontario Securities Commission launched an investigation on Binance to examine whether the crypto exchange complies with the regulations. Consequently, the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance for violating the crypto regulation. The SEC argued that Binance offered unregistered products and engaged in data manipulation.
In their submission, the SEC presented 13 cases against Binance. Besides the SEC’s latest legal action, the commission accused Kraken, Gemini, and Coinbase of violating the regulations.
Additionally, the SEC argued that Binance was operating through a web deception approach led by the chief executive Changpeng Zhao. Following the SEC lawsuit, the Binance team plans to recruit the best-performing legal practitioners to resolve the commission charges.
On June 12, the Binance team hired former SEC enforcement officer George Canellos. The appointment of Canellos aimed to support the crypto exchange defense against the lawsuit submitted by the SEC and other regulatory agencies.Canellos, who has vast experience in the legal sector, will join the Binance attorney team.