Thailand’s Securities and Exchange Commission filed a criminal complaint against Binance in early July for operating a digital asset exchange without a license. This can be seen as one episode in a larger regulatory crackdown faced by Binance, the world’s largest crypto trading platform.
A statement released on July 2 by the Thai SEC said Binance has provided platform services for trading and exchanging digital assets through its websites, matching buy orders with sell orders for users who wish to perform digital transactions. “In so doing, Binance has solicited the Thai public and investors to use its services, either via its website or Facebook Page: Binance Thai Community,” the statement said.
Three months prior, the SEC issued a warning letter to Binance, demanding a written response from the company. The crypto exchange did not provide a reply “within the specified time,” the financial regulator said.
The development in Thailand is part of a wave of regulatory strikes against Binance in the world’s major economies, in part because governments’ monetary and financial organs say money laundering and fraud take place on the exchange. The firm has responded to 5,600 investigation requests worldwide in 2021 so far, already twice as many as the count for all of 2020, Binance CEO Changpeng Zhao said in a letter published on the company’s website on Wednesday.
The platform was barred from undertaking any regulated business in the United Kingdom in late June. Japan’s Financial Services Agency warned that Binance was operating in the country without a license, while the United States’ Justice Department was reportedly investigating the exchange as it allows users to transact with cryptocurrencies, according to multiple media reports.
On the day when Thailand’s SEC filed its legal complaint against the exchange, the Monetary Authority of Singapore said that it would “follow up” with Binance Asia Services’ crypto exchange license application while the company contends with probes in other corners of the world, per a Bloomberg report. “Binance Asia Services (BAS) is a separate legal entity and does not offer any products or services via the Binance.com website or Binance Markets Limited (BML),” a company spokesperson said to Bloomberg.
“We have seen regulators take a more active interest in the industry as a whole as the industry goes mainstream. We welcome this development, however, there is still much to do to harmonize the treatment of cryptocurrency around the world,” said Binance’s CEO in his letter.
Thailand’s SEC emphasizes that only exchanges with licenses granted by the financial authority can operate in the country. If Binance fails to comply with local regulations, it faces a fine of BHT 200,000–500,000 (USD 6,120–15,300) and the relevant personnel may be jailed for two to five years. There is also a daily fine of BHT 10,000 (USD 300) for each day that the exchange breaches the rules.
Binance’s meteoric rise typifies the popularity of crypto trading in Southeast Asia. Thai citizens lifted trading volumes on crypto exchanges to USD 2.5 billion in 2020, according to a report published by the Bank of Thailand (BoT) in April. But the volatile nature of many coins makes it difficult for them to be used as means of payment, prompting central banks around the world to explore safer and more reliable options.
In May, BoT appointed German payments giant Giesecke & Devrient to design the prototype of a central bank digital currency, or CBDC, in a project that would cost THB 10 million (USD 320,000). Indonesia’s central bank is also preparing its own CBDC. Other major economies in the region—Cambodia, Singapore, Malaysia, and Vietnam—are exploring similar initiatives, some solely for wholesale use.
Cambodia’s central bank launched its pilot interbank CBDC project in October 2020. It links together 11 domestic commercial banks and payment processors, with a goal to foster financial inclusion and interbank transfers, facilitating real-time, electronic transactions of the Cambodian riel. This is one of two projects—the other is in the Bahamas—that have reached the implementation stage, according to a report published by PwC in April.
In late June, Vietnamese prime minister Phạm Minh Chính ordered the country’s central bank to pilot a cryptocurrency program from 2021 to 2023. Cryptocurrencies are not legal tender in Vietnam, and the government has not offered a clear definition of virtual currencies and digital assets. In Malaysia, Suhaimi Ali, director of financial development and innovation at Bank Negara Malaysia, told local media that the central bank is set to run a proof-of-concept project for a wholesale CBDC.