The French arm of Binance, established on November 8, 2021, on Friday revealed its financial statement for 2022. Leading audit service firm RSM Paris audited the Binance platform and concluded that the exchange had faced a loss of €4 million in France. This happened because the income earned from the services of the exchange was less than its expenses.
Regulatory barriers mainly caused the loss of Binance France in the initial financial period. Although the crypto exchange entered French jurisdiction in November 2021, the platform began offering trading and custody services in mid-2022 due to legal limits, resulting in a discrepancy in revenue and costs.
The published statement covers 14 months of expenses from the creation of Binance France in November 2021 to December 2022. On the other hand, the crypto exchange started generating revenue from July onwards, which represents a span of six months since the start of revenue.
The French authority, Autorité des marchés financiers (AMF), granted the crypto platform its digital asset service provider (DASP) license in May 2022. The company added that it took two months to attract new customers and sign new terms and conditions.
The platform recorded the expenses of the 14th month at 14 million ALL, which includes administrators’ salaries, taxes and professional fees. Similarly, the revenue generated during the six months is 10 million. A large portion of this profit is collected from trading fees, Binance claimed.
The discrepancy in income and expenses is a major factor behind the loss. But Binance expects to earn passive income throughout the 2023 financial year.
Audits Binance to comply with regulations
Interestingly, Binance published its accounting details to comply with French crypto regulations. It is the responsibility of crypto companies to disclose their accounts publicly according to implicit crypto regulations.
Likewise, Binance revealed that it currently holds 7 million USDT in its account. The platform announced an additional €1 billion of client assets (French residents only) under management. But it did not break down the amount into cryptocurrencies.
In addition to the fact that Binance France has made public financial statements as part of compliance and is committed to high regulatory standards, the exchange was found suspected of aggravated money laundering a month ago. As it should, the charges brought by the public prosecution resulted in the French authorities launching preliminary investigations into Binance.
Implementing Know-Your-Customer (KYC) procedures on exchanges helps monitor crypto users and flag potential money laundering activities. And the latest investigation into the exchange by the French authority mainly aims to confirm whether Binance France has not complied with KYC rules.
Featured image from Pixabay and chart from TradingView.com
