7 months ago
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Although the AMF extended its transitional period for compliance to December 2025, which allows Binance to operate in France until then, beyond this point, a MiCA license will be required to maintain EU market access.
Binance, the world’s leading cryptocurrency exchange, is facing significant legal and regulatory hurdles in Europe. The conviction of the founder and former CEO Changpeng ‘CZ’ Zhao, who recently pleaded guilty to money laundering charges in the United States could jeopardize its France operations.
Impact of MiCA on Binance’s EU Operations
If the judge hands down the 3 years sentence demanded by the United States Department of Justice to CZ, that could threaten its access to the European Union market. Europe’s new Markets in Crypto-Assets regulation, or MiCA, has a set of comprehensive outlines for crypto exchanges to operate within the EU.
However, Binance’s compliance with these rules will be a subject of debate due to CZ’s criminal conviction, creating uncertainty about the exchange’s future in Europe.
The MiCA has stringent requirements for crypto exchanges, including Anti-Money Laundering (AML) compliance, security measures, and disclosures related to listed assets. Interestingly, the regulation is uniformly applied across all 27 EU members’ states.
Therefore, once the French regulators, where Binance has a key hub, determine that the exchange does not meet MiCA’s standards, the impact could ripple throughout the EU, affecting Binance’s ability to operate.
Commenting on the development, William O’Rorke, a lawyer and partner at crypto-focused law firm ORWL, described it as a matter of life or death for Binance.
“If a company is rejected in France, it should not be authorized elsewhere in Europe,” O’Rorke stated. This implies that a negative outcome in one member state could have far-reaching consequences.
Zhao’s Role as Sole Shareholder of Binance France
The particular point of contention about Binance France is that Changpeng Zhao owns 100% of a subsidiary registered with the French Financial Markets Authority (AMF). Therefore as the sole shareholder, his criminal record could pose a significant obstacle to the exchange’s compliance with French regulations, impacting its MiCA licensing prospects.
Although the AMF extended its transitional period for compliance to December 2025, which allows Binance to operate in France until then, beyond this point, a MiCA license will be required to maintain EU market access. Though Zhao apologized to the judge for failing to establish necessary compliance at Binance, analysts doubt if that will save him.
In June, French authorities launched an investigation into Binance for alleged money laundering, and in December 2022, a group of investors sued Binance for €2.4 million for illegal marketing to French consumers. These legal challenges add more complexity to Binance’s attempts to secure a MiCA license.
Aside from France, Binance faces regulatory challenges in several other European countries. Binance has withdrawn its license application in Germany, deregistered from Cyprus and the Netherlands, and faced restrictions in Belgium. It however remains operational in other EU countries, including Italy, Sweden, Lithuania, Spain, and Poland.
