S'pore joins growing crackdown on Binance: What you need to know about the crypto exchange platform

Binance is the operator of Binance.com and the world's largest cryptocurrency exchange by trading volume.
Binance is the operator of Binance.com and the world's largest cryptocurrency exchange by trading volume.PHOTO: REUTERS

SINGAPORE - The operator of Binance.com has been ordered to stop providing payment services here and to cease soliciting business from Singapore residents as it does not have an appropriate licence from the Monetary Authority of Singapore.

The Straits Times examines the saga so far.

1. What is Binance and how does it operate?

Binance is the operator of Binance.com and the world's largest cryptocurrency exchange by trading volume.

It claims to have an average daily trading volume of US$2 billion (S$2.7 billion) and executes 1.4 million transactions per second. It issues its own cryptocurrency - Binance Coin - which trades with the BNB symbol.

It was founded by Chinese-Canadian Zhao Changpeng in 2017. It does not have a physical headquarters but has an online presence in several countries.

Its Singapore-registered entity Binance Asia Services operates Binance.sg, which offers trading pairs in Bitcoin, Ethereum and Binance Coin. It also provides Singapore-dollar deposits and withdrawals via payments platform Xfers Direct.

Binance Asia Services is exempted from holding a licence under Singapore's Payment Services Act for the provision of digital payment token services as its licence application is being reviewed.

2. What countries have taken action against Binance and why?

In April, Germany's financial regulator BaFin warned that Binance may have violated securities rules over its launch of trading in stock tokens as it did not first publishing an investor prospectus.

In May, it came under investigation by the United States Justice Department and Internal Revenue Service over concerns that cryptocurrencies are being used to conceal illegal transactions, including theft and drug deals, and that Americans who had made windfalls betting on the market's meteoric rise are evading taxes.

In June, its British arm, Binance Markets, was banned from doing regulated business in the country over concerns that it was not doing enough to prevent money laundering and other financial crimes on its platform.

It was also investigated by India's money-laundering agency for suspected violation of foreign exchange regulations.

On June 25, Japan's Financial Services Agency warned Binance against offering services in the country without authorisation.

In July, Hong Kong's Securities and Futures Commission said Binance was not licensed or registered to offer securities. Binance then said that it would restrict Hong Kong users from trading derivative products.

Italy and Thailand joined the crackdown against Binance and warned it against providing unauthorised activities.

Thailand's Securities and Exchange Commission has filed a criminal complaint against Binance for operating a digital asset business without a license,

Malaysia ordered Binance to disable its main exchange, Binance.com, and mobile applications in the country.

3. What is the potential impact of the moves on Binance users, and on the wider cryptocurrency scene?

Following the ban by British regulators, customers there using the Binance crypto exchange have had their ability to make cash withdrawals suspended.

Hong Kong users can no longer open new derivatives products accounts with Binance and were given a 90-day grace period to close their open positions.

Binance Singapore, which operates under Binance Asia Services, said the MAS ban on Binance has “no direct impact” on the services it provides. 

“Binance Singapore (Binance.sg) is a separate legal entity from Binance.com, with its own local executive and management team and does not offer any products or services via the Binance.com website or other related entities, and vice versa."

However, MAS said it expects Binance Asia Services to “immediately begin an orderly suspension” of its facilitation of transfers of digital payment token assets between the firm and its parent company Binance.

This means that Singapore users will soon no longer be able to transfer funds between their accounts on Binance.com and Binance.sg. 

MAS added that Binance Asia Services “will inform its customers of the appropriate arrangements as soon as practicable”.