Binance Faces Setback as German Regulator BaFin Rejects Crypto Custody License Application

According to sources familiar with the matter, Germany’s financial watchdog has chosen not to grant a custody license to Binance, a cryptocurrency exchange. It is unclear whether this decision was a formal one from the Federal Financial Supervisory Authority (BaFin) or simply an expressed intention during ongoing discussions.

A spokesperson for Binance stated that they are actively working to meet BaFin’s requirements and are confident in their team and measures. BaFin declined to comment on specific companies due to professional secrecy requirements in Germany.

Binance withdrawing from several jurisdictions following SEC lawsuit

Recent reports suggest that Binance has withdrawn its application for regulatory approval in Austria and has also ceased its registration with Cyprus’ securities regulator. Additionally, the company decided to exit the Netherlands after a failed registration attempt and was ordered to halt operations in Belgium. Furthermore, it is currently facing allegations from the U.S. securities regulator for operating an unregistered trading platform.

In response to these developments, Binance stated that it is streamlining its European strategy in preparation for the forthcoming crypto regulation by the European Union (EU). The company aims to obtain regulatory approval in one of the EU markets, allowing it to operate throughout the single market.

The spokesperson for Binance reiterated the company’s commitment to collaborative work with regulators worldwide and highlighted their focus on ensuring full compliance with the new EU rules on crypto-assets (MiCA).

Binance currently does not possess a crypto custody license in Germany. This lack of license restricts the company’s ability to advertise its services, which can impede its growth. Several other fintech companies, such as Crypto.com, Cakedefi (backed by influencer Julian Hosp), and Uniswap, have also faced scrutiny from German regulators.

Despite the absence of a license, Binance remains a prominent crypto app in Germany. Users can freely access the Binance website and app, as there are no explicit prohibitions in place. According to Wirtschaftswoche, the company boasts a customer base of two million individuals.