Belgian FSMA Orders Binance to Cease Exchange and Custody Services in the Country
Belgium’s Financial Services and Markets Authority (FSMA) has taken action against cryptocurrency exchange Binance, instructing the platform to immediately halt the offering and provision of exchange services between virtual currencies and legal currencies, as well as custody wallet services, within Belgium. The FSMA’s order is based on the fact that Binance is conducting these services from countries that are not part of the European Economic Area (EEA).
According to Belgian law, individuals or firms operating under the laws of non-EEA countries are prohibited from providing exchange services between virtual and legal currencies or custody wallet services within Belgium as part of their professional activities, even if such activities are supplementary or ancillary. Failure to comply with this prohibition can lead to criminal penalties under the Belgian Law on the prevention of money laundering and terrorist financing, specifically Article 136.
The FSMA has determined that Binance’s offering of these services from non-EEA countries in Belgium violates this prohibition. Consequently, the FSMA has issued an immediate order for Binance to cease providing any exchange services between virtual currencies and legal currencies, as well as custody wallet services, within Belgium.
Binance has not contested the fact that it offers these services in Belgium. Based on the general terms and conditions applicable to Belgian clients on the Binance.com platform, it appears that these services are provided by unidentified Binance Operators. It is reported that there are 27 such companies involved in the operational and technical aspects of providing these services, with 19 of them being located outside the European Economic Area.
Despite repeated requests for information, Binance has been unable to sufficiently demonstrate that the legal entities responsible for providing the aforementioned services in Belgium are based within the European Economic Area and authorized under their domestic laws to offer such services in Belgium. These services include entities that engage in exchange operations between virtual currencies and legal currencies using their own funds and entities acting as legal custodians of digital assets/keys for Belgian clients.
Therefore, despite opportunities provided to Binance to present appropriate documentation and proof, the company has failed to establish that the exchange and custody services it offers and provides in Belgium are carried out by legally authorized entities from another member state of the European Economic Area.
Alongside the immediate cessation of activities in Belgium, the FSMA has required Binance to take prompt action, including contacting affected clients and complying with their instructions, to return all cryptographic keys and/or virtual currencies held by Binance on behalf of Belgian clients. Alternatively, Binance may transfer these assets to entities governed by the law of an EEA member state, duly authorized to provide such services, including within Belgium. In the latter case, Binance is obligated to take necessary precautions to ensure the security of these transfers.
The Crown Prosecutor of Brussels has been notified of the potential criminal offense stemming from these actions.