Binance’s warm welcome in France draws stark divide with UK

France has warmly welcomed Binance’s bid to put down roots in one of Europe’s top financial centers, drawing a deep divide with watchdogs in the UK that rejected the crypto giant.

Binance this week received a nod from French financial regulators, a move that clears the way for the crypto exchange to establish a significant presence in the G7 nation and could also help unlock access to other jurisdictions across Europe.

The group’s success in convincing French financial supervisors to allow one of its subsidiaries to act as a registered digital assets service provider followed a months-long effort by Binance to court local politicians and regulators. Its chief executive Changpeng Zhao said in an interview with the Financial Times that he met President Emmanuel Macron in November 2021.

“[Macron] made it very clear that France wants to attract innovation, wants to bring businesses in, and he views that blockchain and Web 3 is an important sector that he wants to attract, so he wants to attract us, our industry, ”Zhao said. “He just said look, we want to welcome you here. Please apply for a license, ”Zhao added.

Zhao said France would serve as “at least” the regional headquarters for Binance, which has been engaged in a shift from a decentralized structure without a corporate base to a more typical set-up. The Elysée Palace declined to comment on the meeting.

The upbeat reception from France contrasts starkly with the UKwhich last month launched an effort to become a global hub for crypto companies after its tough stance drove many to other jurisdictions.

Macron has long advocated for developing the local tech sector with business-friendly policies. When he was elected president in 2017, he declared France should be a “start-up nation” and set a goal, met this year, of increasing the number of “unicorns” to 25 from only a handful.

Britain’s Financial Conduct Authority said last August that Binance was “Not capable” of being properly supervised and that its “complex and high-risk financial products” posed “a significant risk to consumers”. The censure came after a UK Binance affiliate unsuccessfully applied to become a registered UK crypto company, a process that involves an FCA review of a group’s processes and procedures to prevent money laundering.

The FCA added at the time that Binance’s UK affiliate had “failed to” respond to some of its basic queries, making it impossible to oversee the sprawling group. As recently as March 2022, the FCA reiterated that until “outstanding” issues regarding Binance’s UK subsidiary were addressed, the regulator’s concerns about the firm remained.

Regulators in several other financial hubs including Singapore and Japan have also issued warnings about Binance, largely focused on the products on its platform that allow retail traders to make big bets on digital assets. Last month alone, Binance processed almost $ 1tn combined in spot and futures trades, according to data collated by The Block Crypto.

Following the barrage of regulatory rebukes, Binance said it would make compliance a top priority.

The supervisory organization of the Banque de France, which scrutinises financial companies’ anti-money laundering procedures and management teams, said it had performed “an extremely rigorous assessment” on Binance. The Autorité des marchés financiers, the regulator that ultimately approves applications by crypto groups, declined to comment.

“Binance went through an exhaustive regulatory review. No company is more important than protecting the reputation of Paris as a financial capital, ”added Cédric O, a French digital affairs minister.

Binance’s French registration does not grant the exchange the ability to provide services across the EU, although this may change as the bloc’s Markets in Crypto-Assets Regulation framework is rolled out. The nod from the well-respected French regulators could make other national watchdogs more comfortable with the crypto group.

Local companies said Binance’s move showed that French regulatory arrangements were gaining traction with global heavyweights. Cyril Chiche, chief executive of Lydia – a French fintech app that offers crypto – said Binance’s arrival meant “big global actors are recognizing the regulatory framework and are accepting to comply with it.”

“They don’t give it to the first person who knocks on their door,” Chiche added.

Additional reporting by Victor Mallet and Akila Quinio in Paris

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