Jai Sahu
Binance, the largest cryptocurrency exchange globally, has obtained a long-awaited regulatory license in Dubai.
Binance acquired its Virtual Asset Service Provider (VASP) license after co-founder Changpeng Zhao surrendered his voting power in the exchange’s local entity, as revealed by Binance CEO Richard Teng to Bloomberg on April 18.
The final requirement from the Virtual Assets Regulatory Authority (VARA) for granting the VASP license was for Zhao to relinquish his voting power in Binance FZE, the Dubai-based unit of the exchange, according to unnamed sources familiar with the matter.
This complete regulatory license signifies a significant achievement for Binance, which has faced regulatory scrutiny following the FTX collapse.
In November 2023, Binance agreed to a $4.3-billion settlement with United States authorities to resolve federal charges related to inadequate Anti-Money Laundering (AML) protocols, breaching the Bank Secrecy Act.
Binance co-founder Zhao pleaded guilty to one felony count for failing to maintain sufficient AML protocols and resigned as part of the plea deal. Zhao’s sentencing is scheduled for April 30, with a potential sentence of up to 18 months in prison.
The decision for Binance’s Dubai unit to sever ties with Zhao stemmed from Dubai’s VARA officials’ desire to avoid interference with Binance’s recent settlement with US authorities, resulting in Zhao stepping down as Binance’s CEO.
This served as the primary rationale for VARA insisting on Zhao relinquishing his voting powers in Dubai FZE. Following Zhao’s surrender of voting control, VARA scrutinized the products that the exchange intended to offer in Dubai, according to individuals familiar with the situation.
Despite relinquishing voting rights, Zhao remains the ultimate beneficial owner of Binance FZE’s parent company based in Abu Dhabi.
Binance received a preparatory minimal viable product license from VARA in September 2022, which enabled the exchange to offer a range of digital asset services for qualified retail and institutional investors.