Malta, the island nicknamed ‘ Blockchain Island, ‘ has definitely been a safe haven for cryptocurrency related businesses since the Government of Malta passed three bills in 2018, which introduced an all-inclusive regulatory framework for digital currencies, Blockchain technology and Distributed Ledger Technology (DLT).
Indeed, when one of the largest cryptocurrency exchange companies in the world, Binance, faced uncertainty in both China and Japan, decided to seek asylum in Malta. Well, the commonly used phrase in the media, ‘ Malta-based exchange, ‘ now has precarious and uncertain journalists and reporters, as the Malta Financial Services Authority (MFSA)’s financial watchdog clarified in a statement yesterday; that the giant exchange is not registered in Malta and is therefore not under their jurisdiction.
In fact, when the lawmakers of Malta passed the Virtual Financial Assets Act (CAP 590) in 2018; it became obligatory for businesses in the virtual assets sphere to obtain a license from the MFSA. This law did cast doubt against Binance’s potency.
On Thursday, 21 February, the MFSA, through a public statement, stated that it had not authorized Binance to operate in the country. The Agency cited the media sentiments ‘ Malta-based crypto exchange,’ while, in reality, the exchange does not fall within the scope of Malta’s regulatory oversight. Major publications have used the ‘Malta-based’ phrase to refer to Binance before and sure enough, the MFSA has also made a similar statement saying:
“Following a report in a section of the media referring to Binance as a ‘Malta-based cryptocurrency’ company, the Malta Financial Services Authority (MFSA) reiterates that Binance is not authorized by the MFSA to operate in the crypto currency sphere and is therefore not subject to regulatory oversight by the MFSA.”
Where is Binance Located?
Moreover, as the cloud of uncertainty hangs over Malta’s status within the Binance ecosystem, there is a lot of confusion as to whether the island actually hosts the headquarters of the exchange.
The muddle even worsens when you flashback to ambivalent statements from Binance’s executives such as Binance’s Chief Growth Officer, Ted Lin. He said:
“We have offices in Malta for customer services, and some compliance people there, but it’s not the headquarters per say. It’s the spiritual headquarters. It’s a name that people think about when they think about Binance.”
In addition, Binance’s CEO Changpeng Zhao has also faced similar questions although he has been providing vague answers. When asked what he was doing in Malta, CZ cautiously responded: “we have a small team here.” In addition, Changpeng CZ Zhao last year on November 19 tweeted that the concept of offices and headquarters are old fashioned just like SMS and MMS and that it was time to progress.
Moving forward, what really makes this matter even more confusing is the fact that Binance has never corrected being affiliated with Malta. Crunchbase, a popular website, still claims that Binance is headquartered in Malta. Yes, if it was a mistake, the company should have already corrected it. However, one of the most popular exchanges did not complain about it.
Binance’s Changpeng Zhao Hits Back at MFSA
At press time, Binance’s CEO Changpeng Zhao had responded to MFSA’s claims that the exchange is not regulated in Malta. He tweeted:
There is a mix of truth, FUD & misconception. https://t.co/9rMMAmc1G9 is not headquartered or operated in Malta. This is old news & has always been the case, hence there is quite a bit of FUD turning this into a breaking story. The community’s comments show that understanding. https://t.co/eXCq8rO1Ue
— CZ Binance 🔶🔶🔶 (@cz_binance) February 21, 2020
Nevertheless, it still remains unclear where the exchange is headquartered. CZ and Binance have not yet revealed their base of operation. Although, recent reports suggest the cryptocurrency exchange firm has applied for an operating license in Singapore.