Binance ordered to remove Changpeng Zhao to get Dubai license

Binance, the world’s largest cryptocurrency exchange, has obtained a Virtual Asset Service Provider (VASP) license in Dubai.

The license was granted after Binance co-founder Changpeng Zhao relinquished his voting power in the exchange’s Dubai-based unit, Binance FZE, sources familiar with the matter told Bloomberg.

The requirement for Zhao to give up his voting rights was a key condition set by the Virtual Assets Regulatory Authority (VARA) for granting the VASP license. This is part of broader efforts to comply with international regulatory standards following intense scrutiny of the crypto industry.

While Binance’s current CEO, Richard Teng, confirmed the license acquisition, he described claims about Zhao’s voting power as “pure speculation.” The license is a crucial step for Binance, which has faced regulatory challenges globally, including a $4.3 billion settlement with U.S. authorities in November 2023 over violations of Anti-Money Laundering standards.

“That’s pure speculation. Again, we don’t comment on media speculation… Our relationship, our dealings with regulators are confidential,” said Teng.

Zhao, who pleaded guilty to failing to maintain adequate AML protocols, resigned from his CEO role as part of a plea deal, with his sentencing scheduled for April 30. He remains the ultimate beneficial owner of Binance FZE’s parent company based in Abu Dhabi, despite stepping back from direct managerial roles.

The new approval also follows Binance’s receipt of a preparatory minimal viable product license from VARA in September 2022, which initially allowed the exchange to offer a variety of digital asset services to qualified retail and institutional investors.

The granting of the VASP license aligns with the United Arab Emirates’ goals to position itself as a hub for Web3 and digital assets, as part of its broader economic diversification away from fossil fuels.

The new rules create a legal framework for crypto aimed at protecting investors and designing much-warranted international standards for industry governance. In addition, the VARA now has enforcement powers in Dubai’s special development and free zones with the exception of the Dubai International Financial Centre.

The regulations set out four compulsory rulebooks and activity-specific rulebooks that VASPs must comply with to offer their services. The “Full Market Product Regulations” include guidelines that lay down the rules for compliance, risk management, market conduct, and other requirements.