The cryptocurrency exchange giant, Binance, recently faced a setback in its plans to expand operations in Abu Dhabi. The company withdrew its application for certain operations in the region, according to an updated filing. This withdrawal comes as a surprise, considering Binance’s previously strong presence in the Middle East and North Africa (MENA) region.
The Abu Dhabi Global Market (ADGM) is the regulatory body responsible for overseeing Binance’s application. The withdrawal became effective on November 7, 2023, after initially being submitted on November 15, 2022. It is important to note that Binance was granted permission by the regulator to manage a collective investment fund, which involves pooling assets from multiple clients or sources. However, the regulator imposed several conditions for Binance to meet.
Restrictions Imposed by ADGM
Binance can only offer its services in Abu Dhabi once it fulfills the relevant conditions set by ADGM. These conditions include not holding or controlling client assets and not working with retail clients. Although ADGM has allowed Binance to offer custody services, the overarching restriction on serving retail clients poses a significant obstacle for the exchange.
Previously, Binance had shown a strong interest in establishing itself as a leading cryptocurrency exchange in Abu Dhabi. In April 2022, the company received preliminary approval to operate as a full broker-dealer in the region. This approval reflected Binance’s commitment to the MENA market, as evidenced by their recruitment drive in the area.
Global Licensing Needs Assessment
Binance’s decision to withdraw its application in Abu Dhabi indicates a strategic shift in their global licensing needs. The company stated that the application was deemed unnecessary after a thorough assessment. The spokesperson emphasized Abu Dhabi’s emergence as a leader in the virtual and digital assets ecosystem, portraying the region as a global hub for innovation and responsible growth. However, the spokesperson did not provide clear confirmation on whether retail services are or will be available in Abu Dhabi.
An Unrelated Consequence
According to a Reuters report, Binance’s decision to withdraw its application is unrelated to a recent settlement following investigations by various U.S. agencies. It is worth noting that the resignation of the former CEO, Changpeng Zhao, coincided with this settlement. The filings were officially withdrawn by BV Investment Management, a Binance unit, as confirmed by the company’s website.
The Future for Binance in the Middle East
Although Binance is experiencing setbacks in Abu Dhabi, the company remains committed to working with regulators in the Middle East and other regions. It is unclear how this withdrawal will impact their overall strategy in the MENA market and if they will redirect their focus to other countries in the region.
Binance’s withdrawal of its application for operations in Abu Dhabi has introduced significant challenges for the company’s expansion plans. The restrictions imposed by ADGM, particularly the prohibition on serving retail clients, pose hurdles that must be overcome. Binance will need to reassess its approach in the Middle East and determine the best course of action to navigate the regulatory landscape effectively.