Binance becomes first crypto exchange to receive full operating licenses in El Salvador
In a significant development for the embattled cryptocurrency exchange, Binance has become the first platform of its kind to receive full operating licenses under El Salvador’s new digital assets regulation. This comes almost two years after El Salvador made headlines by becoming the first country to declare Bitcoin as legal tender.
The approval by the Central American country’s central bank and National Commission of Digital Assets represents a step forward for Binance, particularly as it faces scrutiny from global regulators and challenges operating in other jurisdictions.
Min Lin, Binance’s new head of Latin America, highlighted the Salvadoran government’s support of cryptocurrency in a statement, indicating that it “proves security and innovation are complementary assets.”
El Salvador’s decision to embrace Bitcoin has not been without its difficulties. President Nayib Bukele announced the initiative in June 2021, aiming to drive independence for the country’s economy, boost tourism, and encourage business development.
The subsequent rapid rollout, including the introduction of a government-sponsored crypto wallet called Chivo, faced issues from the start, with bugs and fraud marring the launch. Despite offering a $30 reward to incentivize sign-ups, Bitcoin adoption stagnated, and most businesses and residents preferred to stick with fiat currency.
The Bukele administration had also promised a $1 billion bond backed by Bitcoin to reduce its reliance on multilateral institutions like the International Monetary Fund. However, the bond has yet to materialize because of delays in passing digital assets regulation.
Finally, in January, El Salvador’s legislature passed the law establishing the National Commission of Digital Assets. Bitfinex, a partner on the Bitcoin bond project, was the first platform to receive a license under the new regulatory framework in April. The crypto payments app Strike also secured one of the initial licenses and announced plans to move its global headquarters to El Salvador.
In Tuesday’s announcement, Binance declared that it had become the first exchange to receive operating licenses from both El Salvador’s central bank and the National Commission of Digital Assets. The company now holds approvals and registrations in 18 global markets.
Despite this milestone in El Salvador, Binance continues to face legal challenges and regulatory scrutiny on a global scale. Lawsuits have been filed against the exchange by the U.S. Securities and Exchange Commission and the Commodity Futures Trading Commission. The Department of Justice is also expected to take action against Binance soon. European authorities are investigating the company for potential violations of anti-money laundering laws, while Dutch regulators rejected its application to become a virtual assets services provider.
While Binance’s approval in El Salvador is a significant achievement, it is worth noting the criticisms faced by the Bukele administration for its authoritarian actions, including cracking down on gang activity and seeking a constitutionally barred consecutive term. President Bukele, who once referred to himself as the “coolest dictator in the world” on Twitter, now describes himself as a “Philosopher King.”
Analyst comment
Positive news. Binance’s full operating licenses in El Salvador are a significant milestone for the cryptocurrency exchange. It demonstrates the Salvadoran government’s support of cryptocurrency and provides Binance with a secure regulatory environment. However, Binance still faces legal challenges and regulatory scrutiny globally, which may impact its market growth.
