Binance exits Cyprus as crypto regulations loom
Binance, the world’s largest cryptocurrency exchange by traded volume, has submitted an application to withdraw its operations from Cyprus, as confirmed by a listing with the Cyprus Securities and Exchange Commission.
The move comes as Binance undergoes a review process to deregister from the regulator in anticipation of the forthcoming Markets in Crypto Assets (MiCA) legislation by the European Union.
By proactively seeking this rescission, Binance claims it wants to focus on meeting the requirements of the upcoming regulations.
“We are working hard to prepare our business to be fully compliant with MiCA when it is implemented in the next 18 months. To that end, we have made the decision to pull back efforts in Cyprus to focus on our efforts on fewer regulated entities in the EU,” a Binance spokesperson said.
Earlier in October, Binance Cyprus Limited was granted Class 3 registration which allows the world’s largest crypto ecosystem to offer spot, custodian, staking and card services. The Cypriot licensing requires the firm to adhere to strict financial standards under the MiFID II framework, including the segregation and protection of client funds, full transparency of its business operations and capital adequacy controls.
The CySEC has been trying to increase oversight of cryptocurrencies and related assets by integrating EU anti-money-laundering rules into the Cypriot laws.
A policy statement issued in 2021 sets out detailed requirements for crypto firms seeking registration in the regulator’s CASP register. This register is publicly accessible and includes information such as the crypto firm’s name, the legal form, its address and services. The policy also introduced a definition for crypto assets that slightly extends beyond its traditional legal status.
Depending on their structure, the Cypriot regulator says crypto assets may qualify as financial instruments under the Investment Services and Activities and Regulated Markets Law. Additionally, while cryptocurrencies cannot be regarded as legal tender, they may qualify as “electronic money” or “e-money” in the sense of the Electronic-Money Directive.
The European Union (EU) has officially enacted the MiCA bill into law after receiving final approval from finance ministers on June 1. The landmark legislation makes the bloc the first major jurisdiction in the world with a crypto licensing regime and a comprehensive package of rules aimed at regulating the cryptocurrency industry.