Binance withdrew its German crypto license application after being advised by the country’s financial regulator.
Germany’s BaFin reportedly expressed concerns over founder and CEO Changpeng Zhao.
The German regulator stated that the exchange had a complicated structure and questioned CZ’s ability to run it.
BaFin, Germany’s top financial regulator, reportedly advised Binance to withdraw its crypto license application prior to the crypto exchange’s announcement about pausing its German expansion, which came earlier this week. The regulator’s advice stemmed from concerns over the exchange’s founder and Chief Executive, Changpeng Zhao, along with other regulatory concerns.
BaFin Questioned Zhao’s Ability To Run Binance
When Binance stated on July 26 that it was withdrawing its application for a crypto custody license from German regulators, it cited the changing regulatory landscape and the global market situation for its decision to pause its expansion amid regulatory scrutiny.
However, the Wall Street Journal reported today that Germany’s Federal Financial Supervisory Authority (BaFin) advised the crypto exchange to withdraw the application, citing concerns over the firm’s structure and its founder Changpeng Zhao.
BaFin was of the opinion that Changpeng Zhao wouldn’t pass a “fit and proper” test, people familiar with the matter told WSJ. The test is reportedly used to assess an individual’s reputation and professional ability to run a business it supervises. An internal Binance document viewed by WSJ further revealed that the German regulator also expressed concerns over the crypto exchange’s complicated structure.
The internal document, which detailed key elements of Binance’s global expansion campaign, stated that BaFin had an issue with the exchange’s structure, particularly its potential to hinder regulatory supervision. In light of the concerns, the regulator advised the crypto exchange to withdraw its crypto license application.
A spokesperson for Binance previously told WSJ that the decision to withdraw the crypto license application was motivated by multiple factors, including efforts to secure a new European Union crypto license. The spokesperson added that the exchange intended to reapply for a German license in the future, after making appropriate changes to the application.