Belgium’s Financial Services and Markets Authority (FSMA) has ordered the global cryptocurrency exchange and blockchain platform, Binance, to immediately halt all cryptocurrency services offered in the country. The FSMA issued a statement on June 23, citing concerns over Binance’s exchange services between virtual and legal currencies and custody wallet services, which were found to originate from countries outside the European Economic Area (EEA). Such activities are prohibited under Belgian law, and violations of this prohibition may lead to criminal sanctions related to money laundering and terrorist financing.
The FSMA found that 27 companies involved in the operational and technical aspects of Binance’s offerings, 19 of which are outside the EEA, failed to provide required legal documentation and proof of their EEA-based legal entities authorized to offer such services in Belgium. Binance was unable to verify that their services within Belgium were carried out by entities governed by the law of another EEA member state and authorized by their home member state. Consequently, the FSMA ruled that Binance’s activities in Belgium are in direct violation of this prohibition and has ordered Binance to cease these activities with immediate effect.
In addition to the cease order, the FSMA has demanded that Binance undertake immediate measures to return all cryptographic keys and virtual currencies held on behalf of Belgian clients. It insisted these assets should be returned to the clients directly or transferred to entities governed by the law of an EEA member state, with Binance ensuring secure transfers. The Crown Prosecutor of Brussels has been alerted about potential criminal offenses.
Binance has been facing several setbacks in its European operations. Its U.K. subsidiary, Binance Markets Limited, canceled its registration with the country’s Financial Conduct Authority (FCA), while Binance also announced its departure from the Dutch market due to failure in securing registration as a virtual asset service provider (VASP). Furthermore, Binance was fined €3.3 million in the Netherlands in July 2022 for unlicensed operations.
Since February 2022, Binance has been under investigation by French authorities for allegations of “aggravated money laundering” and operating without a license in the country between 2020 and 2022.
The FSMA’s order to cease Binance’s cryptocurrency services in Belgium is a significant blow to the company’s operations in Europe. The move also highlights the regulatory challenges faced by cryptocurrency exchanges operating in the region. As the cryptocurrency market continues to grow, it is crucial for companies to comply with regulatory requirements to avoid legal sanctions and reputational damage.