France’s approval of crypto exchange Binance marked “incomprehensible” by MEP

The French market regulator is facing a setback over its decision to approve the crypto exchange Binance last month, with a European legislator describing the agency’s decision as “incomprehensible”.

Aurore Lalucq, French MEP and member of the European Parliament’s Committee on Economic and Monetary Affairs, has called on the Autorité des Marchés Financiers to review its May decision, which she said gave Binance a “guarantee of respectability”.

Her comments reflect concerns over the Paris – based regulator’s decision in May to register a Binance subsidiary as a digital asset service provider. The decision came after a month-long effort by the world’s largest digital asset exchange to the French authorities, including President Emmanuel Macron, who met Binance chief Changpeng Zhao in November 2021.

The warm reception from France stood in stark contrast to other major jurisdictions, where Binance has been censored over concerns over its policies and procedures to protect consumers and prevent money laundering on its massive crypto-trading platform. The exchange traded more than $ 2tn in spot and derivatives trading last month, according to CryptoCompare data, but is not regulated at the overall group level.

The UK Financial Conduct Authority said in June last year that the stock exchange “was unable to be effectively monitored” and warned that its “complex and high-risk financial products” pose “a significant risk to consumers”. Regulators in Singapore, Japan, Italy and the Netherlands also warned that Binance had offered unregulated services in their markets.

In a letter sent to AMF earlier this month and seen by the Financial Times, Lalucq said the regulator’s decision was “surprising and even worrying … especially since many other advisors, and not the least significant ones, have already refused to give Binance any form of registration or approval ».

AMF said it generally “does not comment on communications with lawmakers”. Binance said it “continues to go beyond industry standards to detect bad players”, and “will continue to meet all regulatory requirements”.

Landfall in France was seen as a key development for Binance’s intention to shift from a sprawling decentralized structure where it has no formal headquarters to a more conventional unit. According to Zhao, France would “at least” serve as the stock exchange’s regional headquarters.

But the registration surprised others. “I did not expect this to happen in France. As a jurisdiction, France is probably the jurisdiction that takes the toughest stance on regulating crypto, ”said Spanish MEP Ernest Urtasun, who is also a member of the European Parliament’s panel on economic and monetary affairs.

Nicolas Louvet, CEO of the French crypto-trading platform Coinhouse, described Binance’s meeting with Macron as “a unique red carpet, which had never been rolled out to French actors”.

The stock exchange’s push to European markets has met with varying degrees of success. Last year, Italy’s market regulator warned that Binance was not authorized to offer local investment services.

However, Binance said in May that they had been approved as a provider of cryptocurrency services in the same country, through another regulatory body that covers financial intermediaries. The group has also taken root in the Gulf, after securing cryptocurrency licenses from both Dubai and Bahrain earlier this year.

Lalucq told FT that “it is our job as European and national legislators to go as quickly as possible to clarify the situation so that institutions can fulfill their responsibilities effectively”.

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