Binance To Setup Crypto-Fiat Exchange In Malta

  • Binance close to closing a deal to open a fiat to crypto exchange in Malta
  • Binance has been struggling to secure a license in Japan 
  • Malta looking to open its doors to blockchain business

Yesterday, news broke from Nikkei that the Japanese financial regulatory body – the FSA (Financial Services Agency) – was planning on warning Binance that they must register as an exchange or face legal action. 

Binance appears to have been planning for this eventuality and is looking to setup a crypto-fiat exchange in Malta due to its favourable legal landscape.

CEO Zhao Changpeng recently told Bloomberg it is looking to build a “fiat to crypto exchange” in Malta. According to the CEO, the company is close to signing a deal with the local banks to secure deposits and withdrawals. However, it is uncertain when this exchange is looking to launch.

The choice of Malta may seem strange considering the exchange is predominantly based in Asia; Zhao Changpeng explained the decision to Bloomberg saying that:

“Malta is very progressive when it comes to crypto and fintech.”

Zhao Changpeng Binance CEO

Malta Opens Doors To Blockchain

Jurisdictions such as the U.S. and China have been clamping down on crypto-asset exchanges either shutting them down completely as China have done, or making operations exceedingly difficult as is the case in the U.S.. Listing any altcoins which are deemed a security in the U.S. requires registering with the SEC and CFTC; this compliance is hard to get and expensive. 

Malta is looking to become a hotspot for crypto-asset innovation by relaxing regulations. The small nation may have secured a deal with one of the largest companies in crypto, a move that will surely bring jobs and tax to Malta.

Joseph Muscat, Malta’s prime minister, has said they aim to be “global trailblazers in the regulation of blockchain-based businesses” and recently welcomed Binance to Malta:

Binance Dominance

If the license in Malta is secured, the company will have two operational exchanges: the pre-existing exchange which is purely crypto to crypto with little to no KYC/AML compliance and the fiat to crypto exchange in Malta which will likely require greater KYC and AML procedures in order to secure and maintain its banking partners - they will not want to expose themselves to the risks of money laundering or terrorist financing claims.

To further their dominance in all aspects of crypto-asset trading, they are apparently in development of a “fully decentralised exchange” that will run on a “tailored blockchain” called Binance Chain.

The DEX (decentralised exchange) will work alongside their existing business model which, if successful, would mean Binance will operate three tiers of crypto exchanges. This would surely lock in their place as the world's largest cryptocurrency exchange.

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Facebook Answers Tough Questions About Libra by U.S. Senate Banking Committee

This article focuses on highlights from the testimony of Facebook's David Marcus, who is a co-creator of Libra and the head of the Calibra project, before the U.S. Senate Committee on Banking, Housing, and Urban Affairs (aka "Senate Banking Committee"), on Tuesday (July 16).

On June 19, the U.S. Senate Banking Committee announced that it will hold a hearing (“Examining Facebook’s Proposed Digital Currency and Data Privacy Considerations") on July 16 to discuss Libra. This is the same Committee that wrote an open letter on May 9 to Mark Zuckerberg, Founder, Chairman, and CEO of Facebook, in order to get answers to seven questions about Facebook's proposed crypto-based global payments system.

For the sake of brevity and clarity, David's comments and those of the senators have been paraphrased and abbreviated. Also, although the actual hearing went on for almost two and a half hours, we focus only on the most interesting and difficult questions that Marcus was asked.

After reading his opening remarks, the questioning of David Marcus started. First up was Senator Crapo (who is the Chairman of the Committee).

Senator Crapo: Should the US not establish the rules?

Marcus: I agree. The U.S. should lead. Switzerland was chosen as the home of the Libra Association because it is a well-established place for many international organizations and not to escape from regulatory oversight. Libra Association will still be registered with FinCEN (as a money service business).

Senator Crapo: Which regulators will be providing oversight for Libra?

Marcus: We are happy to comply with all the appropriate regulators around the world.

Senator Crapo: What info will Facebook will collect when someone uses the Calibra wallet?

Marcus: None (i.e. only what is necessary for AML purposes). Also, people are free to use other Libra wallets (provided by third parties).


Senator Brown: Should anyone trust Facebook with their money?

Marcus: We have made mistakes. Trying to get better. Facebook is just one of 28 members of Libra Association.

Senator Brown: You get paid in USD. Will you pledge to accept 100% of your salary and other compensation in the Libra cryptocurrency?

Marcus: We are not trying to compete with bank accounts. Yes, I would.

Senator Brown: Both parties as well as the President are worried about Libra... What will convince you not to launch Libra?

Marcus: We agree that there are legitimate concerns. That's why we released the Libra white paper so early. We want to get this right.

Senator Toomey: There are lots of benefits in blockchain technology and cryptocurrency. We should be exploring this. We should not strangle this baby in the crib. Is it the plan at some point to seek the consent of participants so you could monetize Calibra users' financial data somehow?

Marcus: No. We will make money in two different ways. First, we expect the transactions taking place through Calibra to lead to more advertising by our business users. Second, we hope to, at some point in the future, partner with financial services companies to offer our users new products/services.

Senator Toomey: Regarding the Libra Reserve, what about the interest that will generated? It could become quite substantial. If Libra Association is a non-profit, why are you distributing this income to the members of the Association and/or the investors?

Marcus: This income will not be unlimited. We will need to find a way to manage the reserves.

Senator Tester: I am concerned about consumer security. With cryptocurrencies like Bitcoin, transactions are final and cannot be reversed. How will you handle theft?

Marcus: Calibra wallet will offer protection against fraud. Consumers will be made whole. We will do our best to resolve those claims as soon as possible.

Senator Tester: What kind of faith can we have in Libra?

Marcus: There will be no fractional reserve (unlike with traditional banking).

Senator Tester: How can you assure us that our money will be there?

Marcus: The reserve is one for one. We want there to be oversight of the reserve.

Senator Tester: How will you stop bad actors from using Calibra?

Marcus: To create a wallet, you will need a government-issued ID. We will go to through AML and CFT procedures.


Senator Tillis: How much money are you putting into the infrastructure?

Marcus: Facebook has the resources to innovate. We have not determined an exact budget.

Senator Warner: How will Facebook support third-party wallets? Will you make it easy for users to move their data from Calibra to other wallets?

Marcus: Yes.

Senator Schultz: Why is Facebook moving to crypto before fixing its other problems?

Marcus: We want to keep innovating and serving our users.