Binance, the largest cryptocurrency exchange in the world, has finally obtained a regulatory license in Dubai. According to sources familiar with the matter, Binance received its Virtual Asset Service Provider (VASP) license after Changpeng Zhao, the co-founder, relinquished his voting power in the exchange’s local entity, Binance FZE. The Virtual Assets Regulatory Authority (VARA) required Zhao to give up his voting power as the final requirement for granting the VASP license.
While Binance’s CEO, Richard Teng, confirmed the receipt of the license, he stated that the idea of Zhao giving up his voting power was mere speculation. This regulatory license is a significant achievement for Binance, which has faced regulatory scrutiny since the collapse of FTX. In November 2023, Binance agreed to pay a $4.3 billion settlement to U.S. authorities for violating the Bank Secrecy Act due to a lack of Anti-Money Laundering (AML) protocols. Zhao, as a co-founder, pleaded guilty to failing to maintain adequate AML protocols and resigned as part of the plea deal. His sentencing is scheduled for April 30, and he could face up to 18 months in prison.
The decision by Dubai’s VARA officials to require Zhao to give up his voting power in Binance FZE was motivated by their desire to avoid interfering with Binance’s settlement with U.S. authorities. This settlement had forced Zhao to step down as the CEO of Binance. VARA scrutinized the products that Binance planned to offer in Dubai after Zhao’s voting control was surrendered. Despite losing his voting rights, Zhao remains the ultimate beneficial owner of Binance FZE’s parent company based in Abu Dhabi.
Obtaining a full license in the United Arab Emirates has been a key focus for Binance’s future operations. Alex Chehade, the general manager of Binance Dubai, emphasized the significance of this license in enabling the exchange to offer a range of digital asset services for qualified retail and institutional investors. In September 2022, Binance received a preparatory minimal viable product license from VARA, which paved the way for the exchange to provide digital asset services.