The world’s largest crypto exchange by trading volume Binance has withdrawn its initial application to Germany’s financial regulator BaFin. The exchange says it took the decision considering the tough regulatory struggle the crypto industry is facing.
Binance had embarked on an expansion plan involving obtaining operational licenses in many countries. However, it is slowing down with the expansion considering the realities on ground. In Germany in particular, the regulator had told Binance it will not grant the exchange a crypto custody license.
However,Binance decided to apply for an operational license all the same, but has now decided to change its mind until things start to improve.
“Binance confirms it has proactively withdrawn its BaFin (Germany’s financial regulator) application. The situation, both in the global market and regulation, has changed significantly,” a spokesperson for the company said on Wednesday.
“Binance still intends to apply for appropriate licensing in Germany, but it is essential that our submission accurately reflects these changes,” the spokesperson added.
Binance’s action is coming after the exchange has faced rejections and regulatory pressure in several countries including Austria, Belgium and the Netherlands. However, these are not the only places where Binance has faced serious issues with regulators.
The battle in the U.S.
Binance’s fate has gotten worse with the growing interest of regulators in the crypto industry. The U.S. seems to be where the heat has intensified the most. The exchange and its CEO Changpeng Zhao were dragged to court by the securities and exchange commission roughly two months ago on allegations of Securities laws validation.
The SEC also claims that Binance has mismanaged the funds of its customers, sometimes mingling it with the exchange’s funds. Binance however has denied these allegations, but has not been able to defend itself up to this point.
Binance isn’t the only exchange facing this battle though. Coinbase, the biggest crypto exchange in the United States is also facing a similar challenge with similar allegations. HoweverCoinbase claims that the SEC has no clear regulation for the industry and has already challenged it in court to produce a clear regulatory framework for the industry.
Another regulator the commodities and futures trading commission (CFTC) has also charged Binance to court, claiming that it violates the commodities Exchange Act.
The CFTC had also in March sued Binance, accusing the exchange of operating an illegal exchange and a “sham” compliance program, saying the company has “offered and executed commodity derivatives transactions on behalf of U.S. persons” in violation of U.S. laws since 2019.
Indeed, these regulatory challenges have affected Binance in many ways, leading to drastic actions such as staff retrenchment, and has also resulted in a drop in its market share of spot digital-asset trading volumes.
Binance gets set to defend self
Although Binance is still battling the SEC in court over allegations of violating security laws and mishandling customer funds, it is getting ready to defend itself against the CFTC’s allegations of Commodity Exchange Act violations.
The exchange is challenging the allegations by the CFTC in a filing within the week. According to the filing documents, the foreign Binance subsidiaries and Binance CEO Zhao plan to file a joint Motion to the presiding Court to Dismiss the Complaint.
If the crypto giant succeeds, this may be a win for other crypto companies facing similar charges from regulators in the U.S., and it will only have the SEC to contend with.