Written by Hazel J. Greene, Senior Analyst

Binance France, the French arm of the leading cryptocurrency exchange Binance, recently released its financial statement for the year 2022. The report, audited by RSM Paris, a reputable auditing service firm, revealed a loss of €4 million. This result was attributed to a revenue shortfall compared to operational expenses.

The primary reason behind Binance France’s losses during its initial financial period was the presence of regulatory barriers. Although the crypto exchange had established itself in the French jurisdiction in November 2021, it was unable to offer trading and custody services until mid-2022 due to legal restrictions. Consequently, there was a significant mismatch between revenue and costs.

The financial statement covers a period of 14 months, from Binance France’s establishment in November 2021 to December 2022. Notably, the platform only started generating income from July onwards, representing six months of revenue.

In May 2022, Binance France obtained the digital assets service provider (DASP) license from the French regulatory authority, Autorité des marchés financiers (AMF). It took two months to attract new clients and finalize agreements with them.

During the 14-month period, Binance France recorded expenses totaling €14 million, which included salaries of administrators, taxes, and professional fees. On the revenue side, the platform generated €10 million in the six-month period, with a significant portion contributed by trading fees, as confirmed by Binance.

The disparity between revenue and expenses played a significant role in the reported loss. However, Binance is optimistic about earning passive income throughout the 2023 financial year.

Interestingly, Binance voluntarily published its accounting details to comply with French cryptocurrency regulations. These rules require crypto companies to disclose their financial accounts publicly.

Binance also disclosed that it currently holds 7 million USDT in its account and manages approximately €1 billion of French residents’ assets. However, the breakdown of this amount into specific cryptocurrencies was not provided.

It is important to note that the disclosure of financial statements by Binance France is part of its commitment to high regulatory standards and compliance. However, recent allegations of aggravated money laundering against the exchange have led French authorities to initiate preliminary investigations, ensuring adherence to Know-Your-Customer (KYC) rules.

The implementation of stringent KYC procedures helps monitor cryptocurrency users and identify potential money laundering activities. Through the ongoing probe, French authorities aim to determine if Binance France has met the KYC requirements.

Binance France’s financial statement for 2022 revealed a loss of €4 million due to a mismatch between revenue and expenses caused by regulatory restrictions. The exchange remains dedicated to complying with French regulations and upholding high standards of transparency. The ongoing investigations will shed light on whether Binance France has adhered to the necessary regulatory protocols.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.