June 29, 2023 at 11:50 GMTModified date: June 29, 2023 at 11:50 GMT
June 29, 2023 at 11:50 GMT

German regulator rejects Binance license

Binance’s woes have been compounded after German regulator Federal Financial Supervisory Authority (BaFin) denied its application for a custodial licence.

German flag. Pic: Unsplash

Binance’s woes have been compounded after German regulator Federal Financial Supervisory Authority (BaFin) denied its application for a custodial licence.

The specific factors behind the denial remain cloaked in uncertainty. Nonetheless, the prominent exchange has made it unequivocally clear that they will not retreat in their pursuit of approval.

In a statement to Finance Forward, a Binance representative emphasised their unwavering commitment, stating: “While we cannot share details of our discussions with regulators, we are continuing to work to meet Bafin requirements.”

It continued: “We are confident that we have the right team and the appropriate measures in place to continue our discussions with the regulators in Germany.”

Binance Germany’s managing director, Jonas Jinger, who recently took on the role, rightfully had not anticipated an easy path to approval. When asked about his top agenda in an interview with Boersen-Zeitung, he responded saying:

“My top priority is the successful establishment of the Binance branch in Germany. The regulatory requirements for this are rightly high. Approval would also send a strong signal to Germany as a financial center. If you want to be sustainable – and that should be the claim for Germany – you need innovative fintechs in your financial landscape.”

Binance faces uncertainty in US and European markets

Binance’s recent struggle in the European market started when it recently announced that it was exiting the Dutch market. It cited reasons of failure to secure an operational licence. It said in a statement:

“Binance has been in a comprehensive registration application process as a virtual asset service provider (VASP) with the Dutch regulator..Although we explored many alternative avenues to service Dutch residents in compliance with Dutch regulations, unfortunately this has not resulted in a VASP registration in the Netherlands at this time. Binance will continue striving to obtain authorizations to provide our products and services to users in the Netherlands.”

The statement further explained that from 17 July, customers in the Netherlands will no longer be permitted to trade or deposit on the exchange.

Binance’s mission to expand across Europe took yet another hit after it withdrew its licence application in Austria. While the specific reason remains undisclosed, there are indications, as reported by Finance Forward, that mounting pressure from Austrian regulators could be a contributing factor.

A spokesperson for Binance was quoted as saying: “We are unable to provide details from our discussions with regulators, but we will continue to act in accordance with our commitments wherever Binance operates.”

Regulatory pressure keeps mounting on the leading exchange, with the United States’ SEC at the forefront of the onslaught. Binance and its founder Changpeng ‘CZ’ Zhao are currently facing charges bordering on securities law violation by the securities regulator.