Germany denies Binance application for custody license

abdelaziz Fathi

German financial regulatory authority has reportedly told Binance that it will not issue a digital asset custody license to the world’s largest cryptocurrency exchange, local publication Finance Forward reported on Thursday.

The exact nature of this denial, whether it was a formal ruling or a communicated intention during ongoing discussions, has not been clarified.

Binance stated that it will not disclose specific details of its conversations with regulators in Germany. However, the exchange affirmed its commitment to comply with BaFin’s requirements.

Binance described the process as detailed and ongoing, emphasizing that it is confident in having the necessary team and measures in place to address the regulatory concerns and navigate the situation.

Changpeng Zhao (CZ), founder and CEO of Binance has confirmed last year that they are in talks with Germany’s regulators to secure a local crypto license. The move marked the first time a major ‘unregulated’ exchange has made a move toward such a coveted licence in Europe’s largest economy.

“We hope to get a licence in Germany. Our team is definitely talking to regulators and based on secondary feedback the conversations are going well,” CZ said while speaking at the Finance FWD Conference in Hamburg.

If approved, the move would have boosted Binance’s ambitions in Europe after it has been on shaky ground last year, with regulators in the UK and elsewhere putting the exchange under intense scrutiny.

To encourage regulated business within the crypto industry, Germany adopts a licensing scheme for digital assets services after the amendment it introduced two years ago to the EU’s Money Laundering Directive.

Any business wishing to offer cryptocurrency services in Germany must first seek approval from the Federal Financial Supervisory Authority, also known as BaFin. US popular exchange Coinbase was the first crypto native startup to be approved by the BaFin in 2021, followed by the Berlin-based financial technology firm Upvest.

Nevertheless, the refusal of a cryptocurrency custody license by German regulators marks another setback for Binance, as it faces regulatory pressures from multiple jurisdictions. It comes barely two days after it withdrew its application for an operational license with the Financial Market Authority of Austria. The exchange said the decision was made in the best interest of all parties involved, including Binance, its clients, regulators, and the broader cryptocurrency industry.

The introduction of MiCA provides a unified regulatory framework for cryptocurrencies and digital assets across EU member states, potentially complicating the approval process for Binance and other crypto-related entities operating in the region.

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