Crypto trading platform Binance bites the dust in Singapore due to tightening crypto regulation.
On September 27, 2021, Binance, one of the world’s largest crypto exchange platforms, announced that its Singapore users would no longer be able to buy and trade cryptocurrencies on its global platform starting from October 26 this year.
Some other services on Binance’s global platform will also no longer be available to Singapore residents. For instance, Singaporean users will not be able to deposit fiat currencies or purchase cryptocurrencies through fiat channels (which allow crypto traders to buy crypto using fiat currencies) and liquid swap (which allows users to trade between two cryptocurrencies at a relatively stable rate).
But what pushed Binance to take this step? Let’s understand the run-up to Binance’s decision and the implications of regulatory checks on the platform.
Regulatory warning
This announcement came in weeks after the Monetary Authority of Singapore (MAS) warned Binance that it might be breaking the law by providing its Singapore users with payment services without the applicable license. Immediately after MAS’s warning, Binance stopped offering Singapore dollar payment options on its global platform and also issued a notice about the removal of its application from Singapore’s Google Playstore and iOS.
At the time being, these restrictions do not apply to its local platform, Binance Singapore, because it is operated by a separate legal entity, Binance Asia Services. Thus, Binance’s CEO Changpeng Zhao urged users to shift to their Singapore platform. Post-September 13, users were no longer allowed to shift their cryptocurrencies between the two platforms.
Zhao has been eager to establish better relationships with regulators worldwide. The platform has been under close inspection by regulators from various locations. Malaysia, Italy, Thailand, Hong Kong, Germany, Japan and the U.S. have all been clamping down on the platform.
The regulatory checks being put on crypto across countries come from governmental concern over the money laundering potential of crypto trading platforms. For instance, Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC) has compared crypto to “The Wild West”.
Implications of the Binance crackdown
The shutdown of Binance’s global platform in Singapore will mean fewer cryptocurrencies for Binance’s Singapore users to invest in. This is because Binance’s global platform supports more cryptocurrencies than its Singapore counterpart.
On a more global scale, the increased scrutiny on Binance appears to be a concerted effort by the governments to show that decentralized platforms cannot be used to escape regulation. Another implication of this crackdown is that governments seem to be putting in place checks to avoid jurisdictional arbitrage (the practice of taking advantage of competing legislation in different jurisdictions). This means that even though trading platforms, like Binance, do not have headquarters in any country, making their mobile application available to a region is enough ground to fall under the region’s regulatory requirements.
The regulatory checks being put on Binance might not be as negative as they seem. With governments regulating Binance and other crypto trading platforms, crypto investors might feel safer. This could encourage more people to invest as well. Binance’s Singapore platform has applied for a license and is allowed to operate in Singapore while its application is being processed.
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