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Binance just got kicked out of Belgium

Binance commingled customer funds and company revenue

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TL;DR

  • The Belgian Financial Services and Markets Authority (FSMA) orders Binance to stop cryptocurrency services in Belgium.
  • FSMA action is due to the exchange’s failure to prove that it operates from within the European Economic Area (EEA).
  • Binance is required to return all cryptographic keys and virtual currencies held for Belgian clients.

Crypto titan Binance has been given a cease-and-desist order by the Belgian Financial Services and Markets Authority (FSMA).

Belgium’s leading financial watchdog has taken action, stating that Binance has been offering and executing exchanges between digital and fiat currencies and providing custody wallet services, all while operating from countries outside the European Economic Area (EEA).

Regulatory action

The FSMA’s mandate stems from Binance’s inability to adequately prove their services provided in Belgium are performed by entities based within the EEA and sanctioned by their respective domestic law.

Binance’s operations were thus found to contravene the laws prohibiting entities from countries outside of the EEA from offering or performing such services within Belgium.

The FSMA’s subsequent decision to order Binance to halt its activities in Belgium is an immediate and direct response to this violation.

Upon an in-depth review of Binance’s operations, the FSMA has discovered a complex network of companies – 19 of them based outside the EEA, involved in the technical and operational aspects of providing these services to Belgian clients.

Binance was unable to demonstrate that these entities were lawfully based within the EEA, despite repeated requests from the FSMA.

Implications for Binance and its customers

In consequence of this, Binance has been ordered to initiate immediate actions to return all cryptographic keys and virtual currencies held on behalf of Belgian clients or to transfer these assets to entities based in an EEA member state and authorized by their domestic law.

Such entities include those performing exchange operations between digital and legal currencies and those acting as legal depositories for digital assets or keys of Belgian clients.

The order delivered by the FSMA goes beyond a simple request to halt operations. It demands the resolution of any outstanding obligations Binance may have to its Belgian clients.

Further implications could involve criminal proceedings as outlined in Article 136 of the Belgian Law on the prevention of money laundering and terrorist financing. The FSMA has already informed the Crown Prosecutor of Brussels of activities that may amount to a criminal offense.

With the enforcement of the EU’s MiCA Regulation (published in the Official Journal of the European Union on 9 June 2023) slated to come into effect in January 2025, activities related to crypto-assets will face stringent general and prudential rules, directly impacting Belgian law.

This regulation could change the trajectory of virtual currencies and related activities within the EU, placing greater emphasis on adherence to regulatory mandates.

While the FSMA’s action against Binance serves as a stark reminder of its dedication to protecting consumers from illegal activities, it also exposes the potential risks associated with the use of virtual currencies.

Until specific regulations are in place, the FSMA, along with other national and European supervisors, continue to caution against these risks.

The looming deadline for Binance to exit Belgium and its immediate repercussions add another chapter to the ongoing saga of regulatory scrutiny that cryptocurrency exchanges continue to face worldwide.

The repercussions of this development will undoubtedly echo across the crypto-sphere as Binance continues to face many hardships. Let’s hope the smart CZ has some tricks in his pockets to get out of this. He usually does.

Disclaimer: The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decision.

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Jai Hamid

Jai Hamid is a passionate writer with a keen interest in blockchain technology, the global economy, and literature. She dedicates most of her time to exploring the transformative potential of crypto and the dynamics of worldwide economic trends.

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