The Philippines' Securities and Exchange Commission (SEC) has instructed that Binance, one of the biggest cryptocurrency exchanges globally, be prohibited from conducting operations in the country.
This action is in response to worries raised about Binance's failure to obtain appropriate licenses and adhere to regulations in the Philippines' cryptocurrency market.
The SEC has raised concerns about Binance's activities in the Philippines, specifically its offering of investment products such as leveraged trading services and crypto savings accounts without the required licenses.
This goes against the Securities Regulation Code of the Philippines, leading the regulatory body to take steps against the exchange.
To ensure the ban is enforced, the SEC has asked the National Telecommunication Commission (NTC) in the Philippines for help.
In a letter to the NTC, the Philipines SEC Chair Emilio Aquino stated that Binance's availability threatened financial security.
“The SEC has identified the aforementioned platform and concluded that the public’s continued access to these websites/apps poses a threat to the security of the funds of investing Filipinos,” the letter read.
The collaborative work between these regulatory organizations is intended to prevent local users from accessing Binance's website and online trading platform.
In the letter, Emilio B. Aquino also stated that the ban on the crypto platform would gradually allow Filipino users to reposition their portfolios in time.
Transition Period and Impact on Investors
The Philippines will ban Binance's operations in the next three months. This will give investors time to adjust and sell their crypto holdings on the platform.
The SEC's decision aims to mitigate potential financial losses for Filipino investors while ensuring compliance with regulatory standards.
Recognizing the ban's potential impact on investors, the SEC has taken active measures to mitigate adverse effects.
The agency has contacted major online platforms, including Google and Meta, requesting the blocking of Binance-related advertisements targeting Filipino users.
Global Regulatory Scrutiny on Binance
The ban imposed by the Philippines' SEC adds to the mounting regulatory challenges faced by Binance on a global scale.
The exchange has encountered increased scrutiny from regulatory authorities worldwide, raising concerns about its compliance with financial regulations and consumer protection standards.
Previous Legal Challenges
Binance's legal troubles extend beyond the Philippines, with notable cases in the United States.
In December 2023, a U.S. court ordered Binance to pay substantial fines to the Commodity Futures Trading Commission (CFTC) for operating an illegal derivatives exchange.
The settlement, which involved financial penalties and changes in leadership, marks a vast legal setback for the exchange.
Despite reaching a settlement, Binance's former CEO, Changpeng "CZ" Zhao, still deals with legal proceedings regarding money laundering charges.
Zhao's decision to step down from his position at Binance as part of the settlement underscores the serious legal issues the exchange is facing.
Zhao's sentencing, initially scheduled for April 30, has been delayed. Discussions surrounding the charges against him are ongoing.