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Binance’s Claim to Legislative Legitimacy, Denied in Malta

In the latest of a series of examples showing Binance’s enthusiasm towards international market expansion efforts, Binance has been known to have filed registration documentation with the local authorities of Malta.

On February 21, 2020: the Malta Financial Services Authority (MFSA) published a publicly-issued statement on the matter.

This came in response to an overwhelming epidemic in which a large number of high-readership, Western crypto-focused publications had assumed, en-masse, that Binance was a “Malta-based cryptocurrency company”.

The MFSA, in response, reiterated that

“Binance is not authorised by the MFSA to operate in the crypto currency sphere and is therefore not subject to regulatory oversight by the MFSA”.

Malta Financial Services Authority (MFSA)

When explaining further, the MFSA clarified that it was presently in the process of determining as to whether or not any of Binance’s operations in Malta “may not fall within the realm of regulatory oversight”.

In our perspective: this part of the statement “heavily implies that the MFSA’s general assumption by the is that many of Binance’s “activities” do fall within the “realm of regulatory oversight”. If this was true, it would mean that Binance were subject to the regulations of Malta.

By performing these activities without possessing an MFSA license would mean that Binance is, and has been, acting in violation of the Virtual Financial Assets Act (CAP 590) of 2018.

“Admission of virtual financial assets to trading and/or for offering virtual financial assets to the public in and from Malta requires an MFSA licence in terms of the Virtual Financial Assets Act (CAP 590) of 2018.”

Malta Financial Services Authority (MFSA)

This raises some important questions, such as:

  • Is the Binance headquartered in Malta?
    • If not: where are they located?
  • And why the confusion?
    • Intentional misinformation / lies?
    • Or innocent miscommunication / misunderstanding?

Binance has an international presence along with a generally positive representation in the media. Despite this, it appears that its location of residence is currently contested.

This is in light of both recent statements from the government of Malta; plus Binance’s lack of impetus towards responding to these potentially destructive comments.

On its homepage, the company describes itself as “The World’s Leading Cryptocurrency Exchange” – offering users the ability to “trade Bitcoin, BNB, and hundreds of other cryptocurrencies in minutes”.

Additionally, Binance offers cross-platform support with web browser support across all platforms; plus dedicated support for home desktop (MacOS, Windows) and mobile device operating systems (Google Android, Apple App Store).

Services, features and products offered by Binance include;

  • Binance Exchange: ‘Blockchain and crypto asset exchange’
    Primary product, and first major attention-drawing release from the company so far. The solution that started it all.
  • Binance Academy: ‘Blockchain and crypto education’
  • Binance Charity: ‘Blockchain charity foundation’
  • Binance Cloud: ‘Enterprise exchange solutions’
  • Info: ‘Cryptocurrency information platform’
  • Labs: ‘Incubator for top blockchain projects’
  • Launchpad: ‘Token launch platform’
  • Research: ‘Institutional-grade analysis and reports’
  • Trust Wallet: ‘Binance’s official crypto wallet’

Back in December 2019, Binance CEO Chaopeng ‘CZ’ Zhangpeng issued an official statement on the issue of Binance & regulations via the official Binance Blog.

In a post published on December 19, 2019: CZ stated that: