North Dakota’s Department of Financial Institutions (DFI) has revoked the money transmitter license of Binance.US, the American branch of the global cryptocurrency exchange Binance. This move, announced by DFI Commissioner Lise Kruse on June 17, makes North Dakota the seventh state to take such action against Binance.US.
Reasons for the License Revocation
The revocation order cited several critical factors behind the decision. Commissioner Kruse stated that BAM Trading Services, operating as Binance.US, failed to adhere to North Dakota’s money transmitter laws. More specifically, the order highlighted Binance and its founder, Changpeng Zhao’s, federal conviction in November for conspiracy to conduct an unlicensed money-transmitting business. Additionally, the company’s inability to maintain an effective Anti-Money Laundering (AML) program contributed to the revocation.
“Binance’s ‘majority beneficial owner and control person,’ Zhao, was recently convicted on felony charges for violating federal AML laws,” Kruse elaborated. The revocation order emphasized that Binance.US does not meet the necessary qualifications or satisfy the requirements for holding a money transmitter license in the state.
| State | Action Taken | Date of Action | Key Reasons |
|---|---|---|---|
| Florida | License revoked | November 2023 | Zhao’s guilty plea for AML violations |
| North Carolina | License revoked | January 23, 2024 | Regulatory non-compliance |
| Maine | License revoked | January 29, 2024 | Failure to adhere to state money transmitter laws |
| Oregon | License revoked | Recent Months | Regulatory issues and non-compliance |
| Alaska | License revoked | Recent Months | Failure to meet state regulatory requirements |
| North Dakota | License revoked | June 17, 2024 | AML violations and federal conviction |
| Texas, New York, Vermont, Hawaii | No license granted | – | Non-issuance due to compliance concerns |
This table summarizes the actions taken by various states against Binance.US, highlighting the reasons behind these decisions.
Implications for Binance.US Operations
Binance.US has a 30-day window to request a reversal of North Dakota’s revocation order, which would extend until July 17, 2024. If no such request is made, the order will become effective, officially terminating their license to operate in the state. This revocation follows similar actions by other states, reflecting a broader regulatory challenge for the exchange across the United States.
North Dakota is now the seventh state to revoke or deny the renewal of a money transmission license for Binance.US. Florida initiated this trend in November, shortly after Zhao’s guilty plea. Following Florida’s action, North Carolina and Maine revoked Binance.US licenses in late January 2024. More recently, Alaska, Oregon, and now North Dakota have taken similar steps.
Additionally, Binance.US has faced significant licensing challenges in other states. The company has never received licenses to operate in New York, Texas, Vermont, and Hawaii. Furthermore, new user onboarding has been temporarily paused in Connecticut, Georgia, Ohio, Minnesota, and Washington state, as noted on the Binance.US website.
Binance.US has encountered a series of regulatory hurdles that have significantly impacted its operations across the United States. These challenges stem from concerns over compliance with state and federal financial regulations, particularly those related to money transmission and AML practices.
Despite these setbacks, Binance.US continues to engage with regulatory bodies in an effort to resolve these issues and regain compliance. The company has previously stated its commitment to operating within the legal frameworks of the jurisdictions in which it operates and has made efforts to improve its compliance programs.
The series of license revocations and regulatory challenges has led to a mixed reaction from the cryptocurrency community and market observers. While some see these actions as necessary steps to ensure regulatory compliance and protect consumers, others view them as potentially stifling innovation and limiting access to cryptocurrency trading platforms.
Potential Future Developments
As Binance.US navigates these regulatory challenges, the future of its operations in the United States remains uncertain. The company’s ability to address regulatory concerns and reestablish its licenses will be crucial in determining its continued presence and growth in the American market.
“The Commissioner finds the Respondent does not continue to meet the qualifications or satisfy requirements that may apply to an applicant for a new money transmitter license,” the revocation order states. This statement underscores the significant regulatory hurdles that Binance.US must overcome to maintain its operations.
Moving forward, Binance.US will need to enhance its compliance measures and build stronger relationships with regulatory bodies to navigate the complex landscape of financial regulations in the United States. These efforts will be essential not only for restoring its licenses but also for ensuring sustainable growth and trust among its users.
North Dakota’s decision to revoke Binance.US’s money transmitter license is part of a broader trend of increasing regulatory scrutiny faced by the exchange across multiple states. As Binance.US works to address these challenges and comply with regulatory requirements, its ability to adapt and respond will be crucial in determining its future success in the U.S. market.
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