Binance Gets Full Dubai Licence: What it Means for UAE Cryptocurrency Sector?

Binance FZE, the Dubai arm of world’s largest digital assets exchange Binance, has received its full permit to operate in Dubai following Changpeng Zhao, known as CZ, giving up voting control on the entity.

Bloomberg reported that the licence had been granted and the entity now had its full virtual assets service provider (VASP) licence. The regulator’s website still shows Binance FZE holding a minimum viable product (MVP) operational licence, but that is expected to be updated following the imminent official announcement from Binance.

Bloomberg cited a Bloomberg television interview with Binance CEO Richard Teng confirming that the licence had been received.

What it Means

The VASP licence will allow Binance to provide virtual asset-related services to a broader range of customers. The company previously operated in Dubai under an operational MVP licence, having received that certification in July of last year.

The MVP licence allows firms to provide virtual asset exchange and broker-dealer services to “qualified and institutional investors.” The UAE’s Virtual Assets Regulatory Authority(VARA) classifies a qualified investor as an individual or entity with Dh500,000 ($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 licence, 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 “authorised to serve institutional investors, qualified investors and retail investors.”

Binance joins a growing list of firms to have a VASP licence in Dubai. Bahrain-based competitor CoinMENA received the licence for broker-dealer services last November, while Crypto.com’s licence was finalised earlier this month. Other firms, such as BitOasis, are still working under the operation MVP licence.

Part of UAE’s Diversification Plans

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 licences 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, according to experts in the field.
Binance has faced significant challenges recently. In November, company founder and former CEO Changpeng Zhao pleaded 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 scrutinised. The country 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.

For any enquiries or information, contact ask@tlr.ae or call us on +971 52 644 3004. Follow The Law Reporters on WhatsApp Channels.