Binance abandons plans for crypto platform in Singapore

Binance will shut down its Singapore crypto trading platform after clashing with the city-state's regulators earlier this year, marking the latest blow to the exchange's efforts to establish operations in a major financial hub.

Binance Asia Services, the exchange's Singapore unit, said on Monday that it would withdraw its application for a license to operate a crypto business in the country and wind down its crypto exchange in Singapore by February.

The withdrawal comes after the Monetary Authority of Singapore in September ordered Binance Singapore to halt all crypto transfers with global exchange binance.com, which the regulator had placed on an investor warning list, saying it may violate local law.

Singapore is a key jurisdiction for Binance, one of the world's largest cryptocurrency exchanges, which processes about $170 billion in transactions daily, according to the company.

Its chief executive Changpeng Zhao is based in the city, which has taken a relatively friendly stance towards crypto, especially in contrast to China, which has banned all crypto activity. However, the jurisdiction has taken a rigorous approach to reviewing the dozens of applications for its crypto licenses.

Binance has attempted to set up crypto operations in several financial centers but has faced strong pushback from regulators over concerns about the group's policies and procedures to protect consumers. Britain's financial regulator said in August that Binance's "complex and high-risk financial products" pose "a significant risk to consumers."

Crypto investors in many jurisdictions can access Binance's offshore exchange, which offers spot and derivatives trading, among other services, even if the group does not operate in their country of residence. However, the group has established subsidiaries worldwide to gain greater access to traditional payment networks.

In response to a question about whether Zhao would remain in Singapore, Binance said it would "deploy its employees globally based on strategic needs" and would announce any changes regarding people in "leadership roles."

Zhao, known as "CZ", said on Monday that Binance Singapore's regulatory filing had become "somewhat redundant" after the company acquired an 18 percent stake in a Singapore-regulated exchange HGX last week.

However, there is little overlap between Binance Singapore's crypto trading services and HGX's business, which uses blockchain technology to transact securities.

“We will continue to work with our partners to grow the crypto industry in Singapore,” CZ said. Binance said its Singapore office would refocus on “incubation programs, blockchain education and other investment opportunities.”

The announcement will call into question whether Singapore could host Binance's global home base. CZ launched a search for a formal headquarters earlier this year as part of a campaign to reassure regulators in more than a dozen countries, including Japan, Europe and Britain.

Recent comments and company filings have fueled speculation that Dubai, France or Ireland could be in contention. CZ told the Financial Times last month that he was waiting for more clarity before committing to “a single jurisdiction.”

Binance has sought to burnish its compliance credentials in recent weeks with the release of 10 “fundamental rights” for crypto users, underscoring its “responsibility” to work with regulators and policymakers.

Binance Singapore, which was founded in 2019 with the backing of state investment firm Temasek's venture arm, had been operating in the city-state under temporary approval while its license application was reviewed.

The Monetary Authority of Singapore said in September that binance.com may be violating its rules "for providing payment services to Singapore residents and soliciting such businesses without an appropriate license."

Following the warning, Binance banned users in Singapore from buying or trading crypto on binance.com and directed them to Binance Singapore instead.

Binance Singapore customers now have until mid-February to remove their crypto assets from the platform. The company said “registered users who failed to pass.” [know your customer]” Controls would be suspended immediately.