Binance, the world’s largest cryptocurrency exchange, received a long-awaited regulatory crypto license in Dubai.
Binance received its Virtual Asset Service Provider (VASP) license after co-founder Changpeng Zhao gave up his voting power in the exchange’s local entity, Binance CEO Richard Teng told Bloomberg on April 18.
The Virtual Assets Regulatory Authority’s (VARA) final requirement for granting the VASP license was for Zhao to give up his voting power in Binance FZE, the Dubai-based unit of the exchange, according to unnamed people familiar with the matter.
The full regulatory license could signal a significant win for Binance, which has been under intense regulatory scrutiny for at least two years, since the FTX collapse.
In November 2023, Binance agreed to pay a $4.3-billion settlement to United States authorities to settle federal charges related to a lack of Anti-Money Laundering (AML) protocols violating the Bank Secrecy Act.
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Binance co-founder Zhao pleaded guilty to one felony count, namely for failing to maintain adequate AML protocols, and resigned as part of the plea deal. Zhao’s sentencing is set for April 30. He faces up to 18 months in prison.
Why Did Binance’s Dubai Unit Sever Ties With Zhao?
Dubai’s VARA officials wanted to ensure that they didn’t interfere with Binance’s recent settlement with U.S. authorities, which forced Zhao to step down from his position as the CEO of Binance.
This was the main reason for VARA requiring Zhao to cede his voting powers in Dubai FZE.
After Zhao’s voting control was surrendered, VARA took a stringent look at the products that the exchange planned to offer in Dubai, according to people familiar with the matter.
Despite receding voting rights, Zhao remains the ultimate beneficial owner of Binance FZE’s Abu Dhabi-based parent company.
Gaining a full license in the United Arab Emirates has been a focal point for Binance’s future operations, according to Alex Chehade, Binance Dubai’s general manager, said:
“Binance identified that the senior leadership of the UAE wanted to establish the region as a focal point for Web3. They’re trying to diversify away from fossil fuels, and they see [crypto] as a great driver for doing so.”
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.
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