This article first appeared in The Edge Malaysia Weekly on August 9, 2021 - August 15, 2021

In the opaque world of cryptocurrency, digital exchanges are key gateways that allow for the exchange of money between digital coin and fiat currency. Towards this end, Binance is one of the world’s biggest digital exchanges and, until recently, had a global footprint stretching across Europe to Asia, including Malaysia. Its founder and chief executive Zhao Changpeng, who is a Canadian Chinese, is said to be based in Singapore. Last week, the Securities Commission (SC) banned Binance from operating on all its technology platforms in Malaysia — from its website to mobile applications, including the Telegram app.

The SC’s action follows a global crackdown on Binance in other jurisdictions such as Japan, Hong Kong, Italy and the UK. However, the authorities in other countries have only disallowed Binance from carrying out its crypto-asset operations. The SC went one step further by singling out Zhao, the chief executive of Binance Finance Ltd, for reprimand. Surprisingly, while the SC came down hard on Binance, the Monetary Authority of Singapore (MAS) gave approval in principle for its first digital payment licence to an Australian-based digital exchange company.

Independent Reserve received approval to offer digital payment token services in Singapore, subject to it fulfilling several conditions. One is to follow strict disclosure rules to prevent the exchange from becoming a gateway to launder money and be used as a conduit to legitimise ill-gotten gains.

The developments in Singapore shows that there is still hope for digital exchanges but there are many compliance issues to fulfill. Binance was reported to be among the companies eyeing a digital payment licence in Singapore but did not get it. This is despite the Lithuania-based outfit having a tie-up with Visa and Mastercard.

Malaysians were taken by Binance. Now, many will be counting their losses and should not blame the SC, which raised the red flag on Binance a year ago.

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