Binance Asia withdraws cryptocurrency services application in Singapore

By Nicholas Clark


https://blockworks.co/binance-asia-will-end-service-in-singapore/


Binance Asia Services, the Singapore unit of international cryptocurrency tracing platform Binance, will close its Singaporean trading platform, withdrawing a licence application to the Monetary Authority of Singapore (MAS). [1] This follows MAS’s September order that Binance cease all crypto transfers with its global exchange platform, which MAS announced may be “in breach” of Singapore law. Binance, the world’s largest cryptocurrency exchange, facilitates a total transaction volume to the order of $170 billion daily, and has sought to set up cryptocurrency exchanges in a number of financial hubs. However, the expansion of the exchange has encountered substantial regulatory hurdles. In the United Kingdom, the Financial Conduct Authority (FCA) has claimed that Binance’s local outfit is operating without prior regulatory approval. [2]


Binance’s regulatory woes are symptomatic of broader issues in the emerging cryptocurrency market. Cryptocurrency, as a fairly novel and complex asset class that presents a unique set of risks to consumers, has presented a significant challenge to regulators and financial institutions across jurisdictions. The Monetary Authority of Singapore applies “very high standards” to cryptocurrency licences, given the fact that cryptocurrency technology poses “key risks” and may facilitate illicit transactions, such as money laundering. [3] In the UK, cryptoasset regulation is governed by a patchwork of governance frameworks, subject to FCA registration and regulation, which does not extend to all cryptoassets. [4] Despite calls for legislative oversight and further regulation of the cryptocurrency market, a full regulatory regime has not yet been implemented in the UK.


The scale of the cryptoasset market in the UK has meant that it, in the view of the Bank of England’s Governor Andrew Bailey, could become a threat to the UK’s “financial stability”, as part of a call for more comprehensive regulatory frameworks. [5] More broadly, the International Monetary Fund has threatened that cryptocurrencies such as Bitcoin could present “systemic risks”, following the adoption of Bitcoin as legal tender in El Salvador. [6] The same systemic risks that cryptocurrency poses to financial markets also mean that financial institutions must be cautious with regulatory approaches, given the size and volatility of the global cryptocurrency market. As seen in both Singapore and the UK, regulatory regimes for cryptocurrency are in their infancy, and new governance approaches will likely form a significant part of 2022’s regulatory agenda.





References:

[1] https://www.channelnewsasia.com/business/binance-sg-singapore-close-withdraw-mas-application-2375571

[2] https://www.coindesk.com/policy/2021/06/27/binance-isnt-allowed-to-be-operating-in-the-uk-watchdog-warns/

[3] https://www.bloomberg.com/news/articles/2021-12-17/binance-among-firms-stymied-by-singapore-money-laundering-rules

[4] https://thelawreviews.co.uk/title/the-virtual-currency-regulation-review/united-kingdom

[5] https://www.pymnts.com/cryptocurrency/2021/boe-governor-calls-for-regulation-says-crypto-becoming-threat-to-uk-financial-stability/

[6] https://www.coindesk.com/policy/2021/11/23/bitcoin-should-not-be-legal-tender-in-el-salvador-imf/#:~:text=The%20International%20Monetary%20Fund%20(IMF,its%20newly%20established%20payment%20ecosystem