Following the collapse of cryptocurrency exchange FTX in November 2022, regulatory bodies around the globe intensified their oversight of crypto-related businesses. This increased vigilance has led to various regulatory actions and warnings, significantly impacting numerous crypto enterprises, including MEXC. The Estonian Financial Intelligence Unit (FIU) has recently withdrawn the crypto license of MEXC Estonia OÜ. This development raises questions about the future viability of MEXC in the increasingly regulated crypto environment.

Intensified Regulatory Actions

MEXC’s website lacks clear information regarding its regulatory compliance, and references to MEXC Estonia OÜ are absent, only becoming visible to users engaging in crypto purchases via the platform. The past year has seen a series of warnings and actions taken against MEXC by various regulatory bodies:

  • In August 2023, the British Columbia Securities Commission (BCSC) in Canada issued a warning against MEXC.
  • The Austrian Financial Market Authority (FMA) followed suit with a similar warning in September 2023.
  • In October 2023, Germany’s Federal Financial Supervisory Authority (BaFin) not only warned against MEXC but also initiated investigations.
  • The most significant blow came on November 17, 2023, when the Estonian FIU revoked the license of MEXC Estonia OÜ.

These events highlight the challenges unregulated crypto entities face in maintaining their operations under current and future regulatory frameworks.

MEXC’s Compliance Status Downgraded

In light of these developments, MEXC’s compliance status was downgraded to ‘Red Compliance’ in November, following the accumulated warnings and findings from independent investigations. It was discovered that MEXC Estonia OÜ, licensed by the FIU, functioned as a payment agent for MEXC without any other apparent licensing or regulatory approval. The entity processed bank and credit/debit card transactions, collaborating with partners like Mercuryo, Banxa, MoonPay, and Simplex.

After reporting these findings, MEXC Estonia’s legal representatives from Brandl Talos law firm reached out, initially arguing the independence of MEXC Estonia from the crypto exchange, and later asserting its proper licensing in Estonia. Despite these claims, the recent revocation of MEXC Estonia’s license raises significant doubts about its regulatory standing.

The Future of MEXC

The withdrawal of MEXC Estonia’s license and the accumulation of regulatory warnings place MEXC in a precarious position. Potential consequences include:

  • Payment facilitators like Mercuryo, MoonPay, Banxa, or Simplex may have to cease their services for MEXC.
  • MEXC might be forced to exit jurisdictions requiring a regulatory license for its financial services, which includes most of North America and Europe.
  • Partnerships with other licensed crypto exchanges could be at risk, as these entities might sever ties to avoid jeopardizing their own licenses.

Given these challenges, MEXC’s client base, reportedly exceeding 10 million users, faces substantial risk. Customers are advised to transfer their assets to regulated and registered crypto exchanges. While MEXC’s future remains uncertain, the likelihood of it overcoming these regulatory hurdles appears slim, underscoring the importance for clients to act promptly to safeguard their investments.