The Financial Services and Markets Authority (FSMA) of Belgium issued a stern directive to Binance to immediately terminate its offerings of virtual currency services within the country.
The order, given on Friday, June 23, follows allegations of Binance's violation of Belgium's financial regulations.
Binance has been providing exchange services between virtual currencies and legal tenders as well as custody wallet services, operating from countries outside the European Economic Area (EEA), FSMA claims.
Such operations, even if supplementary or ancillary, are strictly forbidden under Belgian law, which requires that these services are provided by entities based within the EEA.
Failing to abide by these regulations could result in criminal sanctions, under Article 136 of the Belgian Law on the prevention of money laundering and terrorist financing.
Binance does not contest offering such services in Belgium. The company also failed to provide adequate proof that the operations were conducted by entities based in the EEA.
Binance's services are carried out by 27 unidentified operators — 19 of them located outside the EEA.
The FSMA concluded that Binance has not been able to demonstrate that it is operating under an entity from another EEA member state authorized to provide these services in Belgium. Binance must stop its activities in the country immediately and return or securely transfer all cryptographic keys and/or virtual currencies held on behalf of Belgian clients, the FSMA demands.
Binance's alleged misconduct has been reported to the Crown Prosecutor of Brussels, highlighting potential criminal offenses.
While the provider of exchange services and custody wallet services remains an unregulated activity, except for anti-money laundering and terrorist financing, Belgium has adopted the 5th Anti-Money Laundering Directive. The directive imposes new obligations on the crypto sector to counteract money laundering. Moreover, the recently published EU’s MiCA Regulation, coming into effect in January 2025, will introduce broader rules for crypto-assets activities.
In the interim, consumers are reminded of the risks associated with virtual currencies, as expressed in warnings by the FSMA and European supervisors.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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