Cayman Islands regulator is investigating Binance's activities in the territory
July 2, 2021, 1:00AM EDT · 3 min read
The Cayman Islands Monetary Authority (CIMA) has said that despite media reports of Binance being incorporated in the territory, it is not licensed by the regulator to operate a crypto exchange business from or within the Islands.
In an announcement published on Friday, the CIMA said it is informing the public that none of Binance, the Binance Group or Binance Holdings Limited is under its regulatory oversight to run a crypto exchange business from or within the British overseas territory.
"The Authority is currently investigating whether Binance, the Binance Group, Binance Holdings Limited or any other company affiliated with this group of companies has any activities operating in or from within the Cayman Islands which may fall within the scope of the Authority’s regulatory oversight," the CIMA said in the notice but did not make any accusation of potential wrongdoings.
"Binance.com has always operated in a decentralized manner. Binance.com does not run a cryptocurrency exchange out of the Cayman Islands, as reported incorrectly in some media articles previously," a Binance spokesperson responded in a statement.
"We do however, have entities incorporated under the laws of the Cayman Islands performing activities that are permitted by law and not related to operating crypto-exchange trading activities. We will work with regulators to address any questions they may have," the exchange added.
According to the Cayman Island business registration record, at least Binance Holdings Limited is incorporated as a business entity within the territory.
The CIMA added that any company incorporated in the territory, operating a crypto exchange business in or from within the Islands must fulfill at least one of the two criteria.
They must be registered or licensed in accordance with the Virtual Asset (Service Providers) Act, 2020 (“VASPA”) or be an existing regulated company that is already granted a waiver by the CIMA under the VASPA.
According to local reports, Virtual Asset Service Providers (VASPs) must register with the CIMA by January 31 this year and the second phase of the enforcement of the law is expected to be effective in June which would include "licensing and prudential supervision."
The CIMA notice came a day after the Singapore Monetary Authority said it would review the license application again from Binance Asia Services Pte because its parent entity Binance Holdings Ltd came under regulatory scrutiny worldwide, according to a Bloomberg report.
Last week, the U.K. Financial Conduct Authority issued a statement to bar Binance's UK entity from partaking in any "regulated" activities, although in practice the notice does not appear to have a direct impact on the services offered by binance.com that are being used by U.K. customers. But it was evidence of how little control regulators have over the crypto exchange giant.
Last month, Binance said it is exiting the Canadian province of Ontario amid a regulatory crackdown there and all Ontario-based users must close out all active positions by December 31, 2021.
The Japanese Financial Services Agency also issued another warning in June that Binance is still offering services to Japanese residents without having a proper license or having registered with the financial watchdog.
Binance said it "does not currently hold exchange operations in Japan, nor do we actively solicit Japanese users." But it declined to comment when asked if that means Binance by default allows Japanese users to visit and trade on its site.
In May, it was reported that Binance was facing an investigation by the U.S. Internal Revenue Services and the Department of Justices. That was on top of the inquiry Binance was reportedly facing from the U.S. Commodity Futures Trading Commission. But federal agencies did not accuse Binance of wrongdoing at the time.
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