Binance, among the highest volume crypto exchanges in the world, is moving from Hong Kong to Malta, where it will launch a “fiat-to-crypto exchange” according to CEO Zhao Changpeng. According to Changpeng, Binance is close to securing a deal with local banks to enable these fiat deposits and withdrawals.
Changpeng’s decision to move the company was based on a number of factors. He has stated that “Malta is very progressive when it comes to crypto and fintech.” By contrast, China and the US have been targeting cryptocurrency exchanges, and enforcing regulations that have presented challenges for new businesses to enter the space while remaining compliant with state and federal laws. Binance chose to set up an office in Japan, and has been working to obtain an operating license in the country. However, due to recent warning from Japan’s Financial Services Agency (FSA) for operating without approval, the company has decided not to continue its quest for Japanese licensure.
While moving operations to Malta, Changpeng will continue discussions with Hong Kong after receiving a warning letter from the Hong Kong Securities and Futures Commission (SFC). Binance was among seven cryptocurrency exchanges to receive the warning, along with a number of ICO issuers.
While regulators in countries like the US are driving exchanges and ICOs out of the country, the government of Malta has been exploring ways to become a hub for cryptocurrency development and trade, according to a number of press releases and a tweeted statement by Prime Minister Joseph Muscat who wrote, “Welcome to #Malta @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses.”
Welcome to #Malta 🇲🇹 @binance. We aim to be the global trailblazers in the regulation of blockchain-based businesses and the jurisdiction of quality and choice for world class fintech companies -JM @SilvioSchembri https://t.co/3qtAQjOpuQ
— Joseph Muscat (@JosephMuscat_JM) March 23, 2018
The Maltese government has held several public consultations on digital currencies, token sales and exchanges. They are also planning a Malta Digital Innovation Authority to provide a level of compliance for blockchain-based businesses. This agency will certify and regulate digital asset companies within this new framework for ICOs. Rather than coming at the digital currency industry as an authoritative police force, Malta has invited people like Changpeng to review the upcoming bill, to ensure its compatibility with cryptocurrency businesses.
Binance currently has a 24-hour trading volume of $2.60 billion according to CoinMarketCap, making it the second largest cryptocurrency exchange in the world, second to Upbit, which has a 24-hour volume of $2.79 billion. The third largest exchange, Huobi, has less than half the volume of Binance. Such volume will mean a serious injection of revenue for the tiny island nation of Malta. Located in the Mediterranean, Malta is a member of the EU and has a population of just 437,000.
In addition to setting up shop for its centralized exchange in Malta, Binance is planning a decentralized exchange. They may look to replace the centralized exchange with the new one, once completed. This would be an open marketplace for ICOs. Changpeng has stated that it will be possible for scammers to list their tokens on the new decentralized exchange, but this is the price to pay for a truly open exchange.