Belgium orders Binance to cease virtual currency services

Binance violated Belgian law by offering exchange services and custody wallet services from non-EEA countries

Belgium’s Financial Services and Markets Authority (FSMA) has issued a directive to cryptocurrency exchange Binance commanding it to immediately halt all virtual currency services in the country.

The FSMA's decision comes as a result of Binance's operations providing exchange services between virtual currencies and legal currencies, as well as custody wallet services, originating from countries outside the European Economic Area (EEA).

Belgian law strictly prohibits individuals or businesses operating under the jurisdiction of non-EEA countries from engaging in professional activities, including offering exchange services or custody wallet services for virtual and legal currencies within Belgium.

Violations of this prohibition carry criminal penalties as outlined in the Belgian Law on the prevention of money laundering and terrorist financing.

The FSMA has determined that Binance's activities in Belgium from non-EEA countries directly contravene this prohibition. As a result, the FSMA has ordered Binance to cease all operations related to exchange services between virtual and legal currencies, as well as custody wallet services, in Belgium, effective immediately.

In addition to the cessation order, the FSMA has stipulated that Binance must communicate with its clients and comply with their instructions. They are required to either return all cryptographic keys and virtual currencies held for Belgian clients or transfer these assets to entities operating within the EEA and authorized by their respective domestic laws to conduct such activities in Belgium. Binance has also been instructed to take appropriate measures to ensure the secure transfer of these assets.

The FSMA's decision follows a series of actions taken by US regulators targeting Binance for non-compliance with regulations. At the beginning of June, The US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO Changpeng Zhao, alleging securities violations and diversion of customer funds.

Binance and Zhao faced similar accusations earlier this year from the US Commodity Futures Trading Commission (CFTC) regarding the offering of unregistered cryptocurrency derivatives products, preceding the SEC's lawsuit. In addition, the US Department of Justice (DOJ) is conducting an investigation into Binance for potential violations of Russian sanctions.

As the FSMA continues its mission to protect consumers from illegal activities within Belgium, it is crucial to note that virtual currency services and custody wallet services remain unregulated activities, with the exception of measures against money laundering and terrorist financing.

The EU's MiCA Regulation, set to take effect in January 2025, will introduce comprehensive rules governing crypto-assets, including prudential regulations.

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Written by Silvia Pavlof

Silvia has explored various forms of writing, ranging from content creation for social media to crafting movie scripts. Drawing on her experience as a journalist specializing in the gambling sector, she is currently investigating the impact of cryptocurrencies and blockchain on traditional gambling and iGaming.