Binance secures VASP license in Dubai after CZ relinquishes voting power in local entity.
The transfer of voting rights by CZ in Binance FZE, the Dubai-based unit of the exchange, was the regulator’s final requirement.
CZ pleaded guilty to a criminal charge and resigned as part of the plea deal. His sentencing is scheduled for April 30, with a risk of up to 18 months in prison.
CZ Relinquishes Voting Power for Binance to Obtain License
Richard Teng, CEO of Binance, announced on April 18 to Bloomberg that Binance has received its Virtual Asset Service Provider (VASP) license after co-founder Changpeng Zhao gave up his voting power in the exchange’s local entity.
The transfer of voting rights by CZ in Binance FZE, the Dubai-based unit of the exchange, was the Dubai Virtual Assets Regulatory Authority’s (VARA) final requirement for granting the VASP license.
Regulatory and Judicial Context
This comprehensive regulatory license represents a significant victory for Binance, which has been under regulatory scrutiny since the FTX collapse. In November 2023, Binance agreed to pay $4.3 billion to settle federal charges in the United States related to anti-money laundering protocol failures, thereby violating the Bank Secrecy Act.
CZ pleaded guilty to a criminal charge, specifically for failing to maintain adequate AML protocols, and resigned as part of the plea deal. His sentencing is scheduled for April 30, with a risk of up to 18 months in prison.
Reason for CZ’s Power Separation in Dubai
Dubai’s VARA officials wanted to ensure that they did not interfere with Binance’s recent agreement with U.S. authorities, which required CZ to step down as CEO of Binance.
This was the main reason why the VARA demanded that CZ relinquish his voting power to Dubai FZE. After CZ’s renouncement of voting control, VARA rigorously reviewed the products that the exchange planned to offer in Dubai.
Obtaining a comprehensive license in the United Arab Emirates has been a focal point for Binance’s future operations, according to Alex Chehade, CEO of Binance Dubai:
Binance identified that senior leaders in the UAE wanted to establish the region as a hub for web3. They are seeking to diversify their economy away from fossil fuels, and they see [crypto] as an excellent engine to do so.
Alex Chehade, CEO of Binance Dubai at CoinTelegraph
In September 2022, Binance had received a minimal viable product license from VARA, allowing the exchange to offer a range of digital asset services to institutional investors and qualified individuals.
