Sam Reynolds

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        <ul>
                <li>Singapore is no longer a candidate for the firm’s official home, as the exchange withdrew its application with the local regulator on December 13</li>
                <li>Binance did not give a reason for the withdrawal, but Bloomberg is reporting that Singaporean regulators were concerned that the exchange could not adequately prevent money laundering or terror financing</li>
            </ul>
    
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<p>Earlier this week <a href="https://cms.blockworks.co/binance-asia-will-end-service-in-singapore/" target="_blank" rel="noreferrer noopener">Binance withdrew its application</a> for a Digital Payment Token license in Singapore and signalled it would close its local Singaporean subsidiary, without giving a reason, leaving many to wonder why the company is seemingly abandoning the country where it was <a href="https://cms.blockworks.co/binance-continues-to-plant-seeds-for-singapore-move/" target="_blank" rel="noreferrer noopener">expected to set up its future headquarters</a>. </p>



<p>Now, <a href="https://www.bloomberg.com/news/articles/2021-12-17/binance-among-firms-stymied-by-singapore-money-laundering-rules" target="_blank" rel="noreferrer noopener">Bloomberg is reporting</a> that the exchange made the move because it wasn’t able to satisfy the Monetary Authority of Singapore that it has sufficient controls in place to prevent money laundering and terror financing. </p>



<p>According to a <a href="https://www.mas.gov.sg/news/parliamentary-replies/2021/reply-to-parliamentary-question-on-digital-payment-token-service-provider-applicants" target="_blank" rel="noreferrer noopener">report this summer</a> from the Singaporean government, of the 170 firms that have applied for a DPT license, 30 have withdrawn while two have been rejected. The number of withdrawals is said to have increased to 100, according to reports. </p>



<h3 class="wp-block-heading"><strong>Investment in Singapore exchange HGX makes license ‘redundant’ </strong></h3>



<p>Binance CEO Changpeng “CZ” Zhao tweeted that the story was “fake news” and Binance is still committed to making Singapore a crypto hub in Asia.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">More fake news / FUD on SG, just ignore.<br><br>Truth: Binance is committed to help make SG a crypto hub in Asia.</p>&mdash; CZ 🔶 Binance (@cz_binance) <a href="https://twitter.com/cz_binance/status/1471774123869102084?ref_src=twsrc%5Etfw">December 17, 2021</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
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<p>&#8220;Our decision to withdraw our license application was for strategic and commercial objectives only. Binance recently made a sizable investment into the regulated exchange HGX, which rendered our application for Binance Asia Services redundant,” a Binance spokesperson told Blockworks via email. “Binance Asia Services has had a robust approach to security, including risk-sensitive application of AML/CFT measures, mandatory KYC and ongoing collaboration with Singapore Police Force’s Anti-Scan Centre (ASC) to combat ransomware, hacks and scams.&#8221;</p>



<h3 class="wp-block-heading"><strong>Will Binance go to Ireland or UAE?</strong></h3>



<p>Even though Singapore was the expected home of Binance, as the company made efforts to hire former Singapore Exchange executive Richard Teng as CEO of its local subsidiary in August, the exchange was rapidly working on a Plan B. In late November it <a href="https://cms.blockworks.co/binance-looks-to-settle-on-ireland-as-global-headquarters/" target="_blank" rel="noreferrer noopener">registered a company</a> in tax-friendly Ireland. </p>



<p><a href="https://www.arabnews.com/node/1987461/business-economy" target="_blank" rel="noreferrer noopener">Other reports</a> say that the exchange is in negotiations with Dubai and Abu Dhabi — two members of the crypto-friendly United Arab Emirates — to open a headquarters there. <br>As per an earlier announcement, Binance will halt trading on its Singapore subsidiary in January, while shutting down the operation entirely in February.</p>



<p>Binance’s eponymous BNB token is down 2.3% over the past 24 hours, according to <a href="https://www.coingecko.com/en/coins/binance-coin" target="_blank" rel="noreferrer noopener">CoinGecko</a>, and down 8% on-week.</p>




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Binance Says Singapore License Withdrawal Due to  ‘Redundancy’ not AML Shortcomings

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        <ul>
                <li>Binance is appearing to come to terms with the fact that it needs to be a regulated entity, and cannot engage indefinite regulatory arbitrage </li>
                <li>First on the agenda is getting a permanent headquarters, which will likely be in Singapore, but Zhao has yet to confirm this </li>
            </ul>
    
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<p>The world’s largest digital assets exchange is now officially on the hunt for a permanent home.<br><br>In an interview with the <a href="https://www.scmp.com/business/banking-finance/article/3148809/binance-battles-regulatory-headwinds-worlds-largest">South China Morning Post</a>, Binance CEO Changpeng Zhao said that while traditional financial institutions are sold on the merits of digital assets as they themselves are regulated entities they can’t be getting involved with organizations that openly flout the world’s regulatory apperatix. So, if Binance wants in on the second part of the digital assets revolution — the merger of traditional institutional capital and crypto — it too will need to play regulatory ball.&nbsp;</p>



<p>“As we run a centralised exchange, we have come to realise that we need to have a centralised entity to work well with regulators. We need to have clear records of stakeholders’ ownership, transparency and risk controls,” Zhao told the SCMP.&nbsp;</p>



<p>Zhao said that when he told regulators that Binance had no permanent headquarters, it was an instant reg flag.&nbsp;</p>



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow"><p><strong>&#8220;There are very simple questions regulators usually ask us which our response is kinda funny. The regulators ask us where&#8217;s your headquarters, and our response is, well, we don&#8217;t have headquarters. That doesn&#8217;t go well with regulators. They don&#8217;t know how to work with us. Sometimes they even think we are dodgy obviously,&#8221; he said. “Four years ago we wanted to embrace decentralization but we do run a centralized exchange. We need a shift. We need to enhance. We are making those changes to make it easier for regulators to work with us.”</strong></p></blockquote>



<p>The question is, where will Binance touch down? <a href="https://cms.blockworks.co/binance-continues-to-plant-seeds-for-singapore-move/">All the signs</a> are pointing to the exchange setting up a permanent shop in Singapore. The city-state has digital asset regulation that is considered by experts to be quite friendly, <a href="https://cms.blockworks.co/hong-kong-and-singapore-take-different-approaches-to-regulating-digital-assets/">much more so than Hong Kong</a>, its perennial rival in the traditional finance world.&nbsp; <a href="https://cms.blockworks.co/binance-continues-to-plant-seeds-for-singapore-move/">In August</a>, the exchange announced it had hired former Singapore Exchange executive Richard Teng as CEO of Binance Asia Services Pte, a company it registered in Singapore in 2018.</p>



<p>During the past year, Binance’s seemingly infinite series of local subsidiaries have been targeted by regulators around the world, from the UK to Hong Kong, Thailand and Ontario.</p>



<p>Its exchange token, BNB, took a major plunge in May from around $672 to a low of $261 as regulators began their global crackdown against the exchange. Since then, it has began a recovery and is currently trading at $427.51, according to <a href="https://www.coingecko.com/en/coins/binance-coin">CoinGecko</a>, up 3% during the last week.  </p>



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Chengpeng Zhao