The Dubai Virtual Assets Regulatory Authority (VARA) has reportedly asked Binance to share more information about the cryptocurrency exchange’s ownership structure and its audit procedures. Dubai regulators are reportedly still interested in encouraging innovation, but without compromising the safety of user funds.
Binance was asked to provide more information
The collapse of cryptocurrency exchange FTX prompted regulators in Dubai to request more information from cryptocurrency license applicants such as Binance, according to a Bloomberg report. According to April 5 reportOfficials at Dubai’s Virtual Assets Regulatory Authority (VARA) have told Binance, which already holds the minimum viable license for the product, in recent weeks to share more information about its ownership structure, governance, and audit procedures.
As previously reported by Bitcoin.com News, no cryptocurrency company, including Binance, has been granted a Full Marketplace Product (FMP) license. According to VARA, only holders of this license can offer a full range of their services to Dubai residents. On the other hand, Binance and some other crypto exchanges have been granted the Minimum Viable Product (MVP) license. This license allows holders to offer their services from an approved range of virtual asset related services “to suitably qualified retail and institutional investors in Dubai.”
However, following the sudden collapse of Sam Bankman-Fried’s FTX, global regulators including VARA are said to have taken a tougher stance when dealing with crypto companies. According to unidentified people quoted in the report, the goal of this new approach is to strike a balance between fostering innovation and protecting user funds.
Sam Blatteis, CEO of The MENA Catalysts, suggested that the Dubai authorities have taken this approach because they want to maintain good relations with their Western counterparts.
“VARA wants to make Dubai a capital for the digital asset economy while safeguarding its business ties with Western jurisdictions like Europe that are adopting stronger crypto regulations,” Blatteis said.
Binance Governance Credentials Questioned
Meanwhile, the Bloomberg report suggested that VARA’s stricter approach could spell trouble for Binance CEO Changpeng Zhao (CZ), who is already facing legal trouble in the US. As Bitcoin.com News recently reported, Zhao is being sued by the Commodity Futures Trading Commission (CFTC). ) accusing him and his firm of violating US derivatives regulations.
Although CZ and Binance have denied the allegations, the lawsuit announcement reportedly caused many users of the exchange to leave the platform. In addition to the alleged derivative rule violations, Binance is said to have a complex ownership structure. This structure, as well as Binance’s lack of a global headquarters, have raised questions about the cryptocurrency exchange’s corporate governance credentials.
Such allegations and accusations against the crypto exchange have prompted regulators like VARA to request more information about Binance’s ownership structure and board procedures. The report also says that other cryptocurrency exchanges operating in the United Arab Emirates (UAE) have similarly been asked to provide VARA with more information about their activities.
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