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Singapore’s central bank said last week it will “follow up” with popular crypto trading platform Binance as appropriate.

This is in light of the actions taken by other regulators. Britain for example, has barred the company from carrying out regulated activities there.

On Thursday (July 7), Binance stepped forward and said that it is committed to working with regulators and putting in place systems to protect users’ interests.

In a letter published on the firm’s website, Binance founder and CEO Zhao Changpeng acknowledged the need for the development of formal guidelines to prevent misuse of cryptocurrencies globally.

Binance CEO Zhao Changpeng
Zhao has said that he will work with global regulators and protect users / Image Credit: Binance

He said that more regulations are, in fact, positive signs that the industry is maturing.

Binance’s Singapore arm is called Binance Asia Services. It runs the Binance.sg platform and is well-known among Singaporeans trading in bitcoin and several other cryptocurrencies.

We take a look at why Binance is facing regulatory scrutiny and how it may impact consumers here.

What is Binance and what does it do?

Binance is one of the world’s largest exchanges in the crypto industry.

Its crypto exchange allows users to trade cryptocurrencies directly with each other. Binance offers a wide range of services to users across the globe, from crypto spot and derivatives trading to tokenised versions of stocks.

binance team
A photo of the Binance team / Image Credit: Binance

Last month, Binance’s trading volumes reached US$662 billion, up almost ten-fold from July last year, according to data from CryptoCompare. According to Glassdoor, the company has grown to hit an annual revenue of almost US$1 billion.

Its own cryptocurrency, Binance Coin, is the fourth-biggest in the world in terms of market cap.

Binance Coin, traded around only S$20-levels in the past, not until the crypto hype in March which caused its token to spike to an all time high of S$915. It is currently hovering around S$430 a piece after China’s recent crypto crackdown.

binance coin price
Binance Coin is the fourth largest crypto in the world by trading volume / Image Credit: Coinbase

Binance’s corporate structure is said to be opaque, with its holding company widely reported to be registered in the Cayman Islands. Its company website states that it has over 2,000 employees in more than 20 locations worldwide.

Is Binance legal in Singapore?

Binance launched its Singapore crypto exchange in 2019, enabling users to purchase and sell crypto assets like Bitcoin using the Singapore dollar through the fast and secure transfers (FAST) electronic funds transfer system.

Binance’s Singapore arm was launched officially in the same year. Called Binance Asia Services, it is backed by Temasek-unit Vertex Holdings.

binance blockchain week singapore 2019
Binance CEO Zhao Changpeng at the firm’s blockchain event in 2019 / Image Credit: Binance

According to the Monetary Authority of Singapore, Binance Asia Services is exempt from holding a licence under the Payment Services Act for the provision of digital payment token services. This is while its licence application is being reviewed.

The company has established its presence in Singapore. Its local address is registered to be Guoco Tower, on 1 Wallich Street. That’s located at Tanjong Pagar, the downtown core district of Singapore.

When Vulcan Post ran a check on its career page, it showed that the company is currently actively hiring more than 50 roles for its Singapore office.

Why are regulators flagging it?

Binance has faced heavy scrutiny from global regulators in recent months. The most prominent regulatory tussle was Britain barring the company from carrying out regulated activities there.

That’s due to the crypto exchange’s growing popularity in Britain. Its app has been downloaded 1.8 million times this year, and 2.2 million times in total, according to mobile data firm Sensor Tower.

This does not come as a surprise as Binance has built up a huge following globally, as seen by its Telegram channels for users in more than 30 countries.

Britain’s Financial Conduct Authority had said that the exchange’s British arm cannot conduct any regulated activity, but did not provide an explanation. Britain generally does not regulate crypto trading, except for some activities like crypto derivatives.

binance bitcoin
The firm is committed to work with regulators / Image Credit: Reuters

The company has also been probed by various regulators and government agencies like Germany and Japan.

Japan’s regulator said last month Binance was operating in the country illegally, while Germany’s watchdog said in April it risked being fined for offering tokens connected to stocks.

It is said that the regulators are worried over the standard of anti-money laundering checks at crypto exchanges and the risks crypto trading poses to consumers. Hence, larger players that are entering new jurisdictions, like Binance, are facing the heat.

Will it get into regulatory issues here?

Binance has said that it takes its compliance obligations very seriously and is committed to following all regulatory requirements wherever it operates.

In a note to Binance users published on its website earlier this week, Zhao came forward to state the firm aims to continue its efforts in working with regulators to meet their concerns amid the growing crypto industry.

binance app
The Binance app / Image Credit: Bloomberg

Zhao said the firm had assisted some 5,600 investigation requests this year from law enforcement agencies around the world to crack down on cybercrimes such as money laundering, scams and terrorist financing.

Based on Zhao’s latest affirmation, Binance appears to stand ready to cooperate with regulators.

The CEO added that the company is beefing up its international compliance team to provide “high-level guidance” and has plans to double the team size by the end of the year.

He commented that setting the foundation for crypto rules properly will allow the broader population to feel safe to participate in crypto. By being cooperative, it will benefit the crypto industry as it allows for an opening up to the mass market, he noted.

“I believe a well-developed legal and regulatory framework in the long term will be a solid foundation that truly makes crypto essential in everyone’s daily life,” he said, adding that clarifying and building the first set of standards is critical for the industry’s continued growth.

Cryptocurrency and blockchain technology is a key content pillar for Vulcan Post. You can find the rest of our cryptocurrency coverage here.

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Featured Image Credit: BBC

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© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)

Vulcan Post aims to be the knowledge hub of Singapore and Malaysia.

© 2021 GRVTY Media Pte. Ltd.
(UEN 201431998C.)