Key Takeaways
- Belgium’s financial authority accused Binance of operating outside of European Economic Area countries, which is illegal in Belgium.
- Binance will have to halt services immediately while it works on complying with Belgium laws, as well as be in accordance with the upcoming MiCA regulations.
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Belgium’s Financial Services and Markets Authority (FSMA) has ordered cryptocurrency exchange Binance to cease all operations in the country immediately. The FSMA asserts that Binance has been providing exchange services between digital and fiat currencies, in addition to custody wallet services, from countries outside the European Economic Area (EEA), violating Belgium’s laws:
“Despite several requests for information made to Binance, the latter has not been able to demonstrate to the requisite legal standard that the legal entities that carry out the services of the above-mentioned type in Belgium are in fact based in the European Economic Area and are authorized, based on their domestic law, to provide such services in Belgium.”
Binance has been allegedly offering these services in Belgium without legal authorization, which is illegal under Belgium’s financial regulations. Despite several opportunities to prove compliance with the legal requirements, Binance has reportedly failed to do so. The FSMA’s decision that prohibits Binance from conducting all activities in the country is effective immediately on June 23.
“Binance does not dispute that it offers such services in Belgium.” However, the entities delivering these services are largely unaccounted for, with 19 of the 27 companies involved being based outside the EEA:
“These services appear to be provided by Binance Operators that are not otherwise identified in the said contractual terms and conditions.”
Additionally, the FSMA has demanded that Binance immediately initiate steps to return all cryptographic keys and digital currencies held on behalf of Belgian clients or transfer these assets to entities within the EEA authorized to conduct its crypto and custodial activities.
While crypto exchange services and custody wallet services are currently unregulated except for Anti-Money Laundering and terrorism financing measures, upcoming regulations under the EU’s Markets in Crypto-Assest regulation will provide a more structured framework for crypto-asset activities from January 2025.
This isn’t the first EU country Binance has had regulatory issues with.
Binance recently requested to leave Cyprus, citing an increased focus on other, more prominent EU markets. This follows its issues with the Netherlands after failing to obtain a Virtual Asset Service Provider license to operate in the country.
Binance, however, is still functioning in Spain, France, Italy, Lithuania, Sweden and Poland.
