Germany’s Federal Financial Supervisory Authority, BaFin, has reportedly expressed concerns over Binance’s application for a crypto custody license. The regulator’s apprehensions are primarily centered around the exchange’s organizational structure and its CEO, Changpeng Zhao, also known as “CZ”. According to reports, BaFin advised Binance that its structure could hinder regulatory supervision.
The “fit and proper” test for Binance’s CEO
BaFin’s regulatory guidelines stipulate that managing directors must possess the required professional qualification, maintain a good reputation, and dedicate sufficient time to their roles. The regulator reportedly informed Binance that CZ may not pass this “fit and proper” test. This development adds to the regulatory challenges Binance is facing globally, including legal actions brought by the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) in the United States.
Binance’s response and future plans
In response to these developments, Binance has withdrawn its license application in Germany. The exchange stated that its decision was partly based on its intent to focus on compliance with the European Union’s Markets in Crypto-Assets (MiCA) framework. Binance has not provided specific comments on the details regarding CZ but has refuted the accuracy of The Wall Street Journal’s report on the matter.
Despite these regulatory hurdles, Binance remains one of the largest crypto exchanges globally. The company’s future plans and strategies to navigate these regulatory challenges will be closely watched by stakeholders in the crypto industry.