The cryptocurrency giant Binance announced on Thursday that it received a virtual asset service provider (VASP) license from Dubai’s regulatory authority, a significant development for both the company and the United Arab Emirates’ growing crypto scene.
Binance FZE, the company’s Dubai subsidiary, said it was granted the VASP license from the Emirate’s Virtual Assets Regulatory Authority (VARA). The subsidiary in a statement called the move “a significant milestone for Binance and the global virtual asset landscape”.
What it means: The VASP license will allow Binance to provide virtual asset-related services to a broader range of customers. The company previously operated in Dubai under an operational minimum viable product (MVP) license, having received that certification in July of last year.
The MVP license allows firms to provide virtual asset exchange and broker-dealer services to “qualified and institutional investors.” VARA classifies a qualified investor as an individual or entity with AED 500,000 ($136,000) in cash and relevant knowledge of virtual assets. Institutional investors include entities that are regulated by a “competent financial services regulator,” other virtual asset service providers and governments with pertinent knowledge of virtual assets, according to the authority’s website.
With the VASP license, Binance said it will be able to extend its services to “retail investors,” defined by VARA as entities that are neither qualified nor institutional investors. Binance will therefore be able to now provide services to individual investors in Dubai who do not meet the aforementioned criteria.
VARA’s website noted on Thursday that Binance is “authorized to serve Institutional Investors, Qualified Investors and Retail Investors.”
Why it matters: Binance joins a growing list of firms to have a VASP license in Dubai. Bahrain-based competitor CoinMENA received the license for broker-dealer services last November, while Crypto.com’s license was finalized earlier this month. Other firms, such as BitOasis, are still working under the operation MVP license, according to VARA’s public register.
The UAE wants to attract cryptocurrency firms as part of its economic diversification plans and has had some success in this endeavor. VARA awarded 19 VASP licenses all in all in 2023, weathering both the cryptocurrency bubble and fallout from FTX’s collapse the year prior. Competition from other states seeking to be crypto hubs, such as Bermuda, and stricter global regulations could pose challenges for the UAE in the future, Samuel Wendel wrote in a memo for Al-Monitor PRO last week.
Binance has faced significant challenges recently. In November, company founder and former CEO Changpeng Zhao pled guilty in a US federal court to breaking anti-money laundering laws. A February sentencing hearing was delayed until later this month.
The UAE’s efforts to combat money laundering have likewise been scrutinized. The Gulf state was added to the Financial Action Task Force’s “grey list” of countries not sufficiently fighting money laundering in 2022, but was removed in February.
Know more: Bloomberg reported on Thursday that CZ agreed to give up voting rights in Binance’s Dubai unit in order to receive the VASP license. The relinquishment of the rights resulted from Emirati officials’ concerns that they would not run afoul of CZ’s deal with US authorities, in which he agreed to step down as a CEO, according to the outlet.
CZ lives in Dubai and is an Emirati citizen.
