{"id":294888,"date":"2021-07-09T16:14:00","date_gmt":"2021-07-09T13:14:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\/"},"modified":"2021-07-09T16:14:00","modified_gmt":"2021-07-09T13:14:00","slug":"binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\/","title":{"rendered":"# Binance in the crosshairs: Are regulators paying attention to crypto?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a40b1f39928f\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a40b1f39928f\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\/#No_widespread_withdrawals\" >No widespread withdrawals<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\/#Growing_protectionist_sentiment\" >Growing protectionist sentiment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\/#Are_new_regulatory_approaches_needed\" >Are new regulatory approaches needed?<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Binance in the crosshairs: Are regulators paying attention to crypto? <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDcvMGI5YWRlNWUtMWZjNS00Nzc3LTlhYjUtZmRkNDI2Nzc3ZmVlLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>Is Binance crypto\u2019s new whipping boy? Regulators in the United States, the United Kingdom, Canada, Japan, Thailand and the Cayman Islands have all recently issued warnings and even criminal complaints against the cryptocurrency exchange. Even Poland entered the fray as its financial regulator warned citizens to exert \u201cspecial caution\u201d when using Binance\u2019s trading services.<\/p>\n<p>Some have opined that the firm has only itself to blame for this recent burst of regulatory heat, but others fear the exchange is being held as a scapegoat for the entire crypto sector \u2014 which has grown too large too fast in the eyes of some authorities. Elsewhere, Binance CEO Changpeng Zhao, known as CZ, felt compelled to address the \u201crecent hyper-focus on regulation when it comes to Binance\u201d in a public letter. <\/p>\n<p>Binance \u2014 founded in Shanghai in 2017 but with no publicly acknowledged headquarters at present \u2014 has never been a poster child for compliance. \u201cBinance has a history of attempting to avoid regulation while also making false statements about being regulated in some of these jurisdictions,\u201d Dan Awrey, professor of law at Cornell Law School, told Cointelegraph, adding, \u201cBinance has, therefore, placed the target firmly on its own back.\u201d<\/p>\n<p>Markus Hammer, an attorney and principal at Hammer Execution consulting firm, told Cointelegraph that regulators are just reiterating previous warnings, but now they are being noticed more broadly. <\/p>\n<p>\u201cWarnings usually are a preliminary to taking real actions,\u201d like a ban on clients using a certain platform, explained Hammer. \u201cThe other reason might be that they are now trying to distance themselves, as investors are preparing to bring legal action over Binance Leveraged Tokens (BLVTs),\u201d which he described as a \u201cdefective\u201d financial product. He added, \u201cA repeated warning that Binance is not regulated would free them from charges against having been blind or inactive before.\u201d<\/p>\n<p>Warnings alone can have consequences, however. When U.K. regulators warned in late June that Binance was operating without a business license, bank giant Barclays announced it would cease to facilitate customer payments to the exchange, with Santander following suit a few days later.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_widespread_withdrawals\"><\/span>No widespread withdrawals<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>But maybe there is no need to overreact? \u201cIn spite of regulatory actions across jurisdictions, there is no mass exodus of tokens from Binance as h<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ened in 2017 in connection with China\u2019s previous onshore exchange crackdown,\u201d Winston Ma, adjunct professor at New York University School of Law and author of <em>The Digital War: How China\u2019s Tech Power Shapes the Future of AI, Blockchain and Cyberspace<\/em>, told Cointelegraph, adding: <\/p>\n<blockquote><p>\u201cThis shows that Binance has a global business and decentralized operation, and the market wasn\u2019t too worried about the recent actions from those countries.\u201d<\/p><\/blockquote>\n<p>Unregulated cryptocurrency exchanges like Binance have long been seen as off-ramps for money laundering and other criminal activities. Over the course of 2019, Chainalysis <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/blog.chainalysis.com\/reports\/money-laundering-cryptocurrency-2019\">traced<\/a> $2.8 billion in Bitcoin (BTC) that moved from criminal entities to exchanges, outlining that \u201cjust over 50% went to the top two: Binance and Huobi,\u201d said the firm, with Binance alone accounting for 27.5%, the most.<\/p>\n<p>Zhao suggested in his July 6 letter that regulation often trails innovation, particularly with revolutionary technologies like crypto: \u201cThe adoption and development of crypto has many parallels with that of the car. When the car was first invented, there weren\u2019t any traffic laws, traffic lights or even safety belts.\u201d Those came later. \u201cCrypto is similar in the sense that it can be accessible for everyone, but frameworks are required to prevent misuse and bad actors. [&#8230;] Binance wants to be a positive contributor.\u201d<\/p>\n<p>Financial regulators are not necessarily looking to go after all crypto enterprises, said Awrey, \u201cThe real problem is that many crypto exchanges are not taking customer protection or legal compliance very seriously.\u201d Most exchanges don\u2019t offer even basic private law protections, as he documents in an upcoming book: \u201cAgainst that backdrop, it\u2019s not realistic to think that regulators would sit back and do nothing.\u201d <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Stablecoins under scrutiny: USDT stands by \u2018commercial paper\u2019 tether<\/em><\/strong><\/p>\n<p>Nor is this necessarily bad for the crypto sector. \u201cQuite the opposite,\u201d Carol Alexander, professor of finance at the University of Sussex Business School, told Cointelegraph, adding, \u201cWe are all waiting for the space to clean up from fraud and manipulation so that we can realize the true value of coins that are needed as gas for smart contracts \u2014 e.g., Ether, DOT, Cardano.\u201d She further outlined for Cointelegraph:<\/p>\n<blockquote><p>\u201cThe real problem with crypto is not the fundamental worthlessness of Bitcoin \u2014 but Binance and Tether [USDT]. These two companies are intrinsically linked because most inflows to Binance are USDT. Without Binance, the market cap of Tether would be much less than $62.5 billion.\u201d <\/p><\/blockquote>\n<p>The more im<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>te reason for the clampdown on Binance, in Alexander\u2019s view, is the spate of class-action lawsuits on behalf of users \u201cwho lost everything on May 19 through auto-liquidations during the futures platform outage,\u201d as well as the \u201clong maintenance mode on BLVTs following wild price swings, after which tokens opened vastly lower instead of up in price.\u201d<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Growing_protectionist_sentiment\"><\/span>Growing protectionist sentiment?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>In a recent LinkedIn <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/posts\/hammer-x_cayman-islands-joins-in-global-regulatory-activity-6817065595729657856-1FG1\">post<\/a>, Hammer noted that many crypto exchanges operate around the world without licenses \u2014 but are not facing the sorts of regulatory measures as Binance has. \u201cOne could therefore argue that unspecified measures against Binance are born from plain protectionist anti-crypto reasons\u201d \u2014 rather than \u201clegitimate causes\u201d like the BLVTs, for instance. <\/p>\n<p>Drawing attention to Binance could thus \u201cbe perceived as a bit arbitrary\u201d where the regulators are arguably picking out \u201cthe biggest of the black sheeps,\u201d he told Cointelegraph. Two countries Hammer cited as possibly embodying this protectionist sentiment were Japan and the United Kingdom.<\/p>\n<p>Regulatory heat from the likes of Thailand and the Cayman Islands probably won\u2019t unsettle Binance too much, but what happens in China and the U.S. might be another story. \u201cWhat matters most to Binance in terms of regulation will be China and the U.S., the two largest crypto markets and also the two most powerful regulatory enforcers,\u201d Ma told Cointelegraph. <\/p>\n<p>What would happen if the U.S. were to take substantive legal action against Binance or if China were to cut off entirely the link between its online crypto traders and offshore exchanges like Binance? \u201cThese are the focal points of the worldwide crackdown on Binance,\u201d Ma added. <\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Death knell for Chinese crypto miners? Rigs on the move after gov\u2019t crackdown<\/em><\/strong><\/p>\n<p>Elsewhere, \u201cI think Singapore will be illuminating because the MAS has been signaling that it wants to become a crypto hub,\u201d Awrey told Cointelegraph, referencing the Monetary Authority of Singapore, the island city-state\u2019s central bank. Accordingly, if MAS rejects Binance\u2019s recent application to operate in Singapore, \u201cthis can arguably be viewed as revealing private information about the firm\u2019s risk profile.\u201d<\/p>\n<p>Binance seems to be mindful of the stakes involved. In CZ\u2019s letter, he further noted that \u201cwe have grown our international compliance team and advisory board by 500% since last year,\u201d including the addition of <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.binance.com\/en\/blog\/421499824684901842\/welcoming-our-new-compliance-and-regulatory-advisors-two-former-fatf-executives\">former<\/a> Financial Action Task Force Executive Secretary Rick McDonell as a compliance and regulatory advisor, as well as <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.binance.com\/en\/blog\/421499824684901776\/binance-hires-former-us-senator-max-baucus-as-policy-and-government-relations-advisor\">former<\/a> U.S. Senator and Ambassador to China Max Baucus. <\/p>\n<p>Should that be taken as a sign of good intentions? \u201cYes, indeed, it should,\u201d answered Hammer. \u201cThey are taking it seriously \u2014 the risks are too high. The problem really seems to be the lack of a regulatory framework, though I would also be careful about the numbers.\u201d That is, Binance might claim 500% compliance growth since last year, but what is its starting point \u2014 a single compliance advisor? This isn\u2019t specified.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Are_new_regulatory_approaches_needed\"><\/span>Are new regulatory approaches needed?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Others have suggested that nation-states aren\u2019t really up to the task of policing borderless, decentralized enterprises \u2014 though most consider Binance a centralized exchange even if its headquarters are difficult to pin down. On this, Awrey said:<\/p>\n<blockquote><p>\u201cWhile many of the enterprises may be borderless and decentralized, most of their customers are not. This theoretically opens the door to forms of regulation and enforcement that many in the crypto community seem to be discounting.\u201d<\/p><\/blockquote>\n<p>\u201cThe problem is not that there is too little regulation out there but rather \u2014 particularly in the U.S. \u2014 there is a missing taxonomy with regard to crypto and tokens, about which regulatory authority and regulation should be applied for which case and situation,\u201d said Hammer. <\/p>\n<p>Europe, by comparison, is \u201cquite advanced with codifying blockchain, DLT and tokens, particularly Switzerland and Liechtenstein,\u201d which have excellent legal and regulatory frameworks, Hammer said, while according to Alexander: <\/p>\n<blockquote><p>\u201cWe need to establish an international crypto markets committee that meets each month and makes recommendations for enforcement into local rules and regulations \u2014 like the Basel Committee does for Banking Supervision with the Basel Accords.\u201d <\/p><\/blockquote>\n<p>This may take some time to achieve, however, she allowed, \u201cand there is nothing to force countries that are prospering economically from crypto asset and derivatives trading \u2014 e.g., Malta \u2014 to adopt these recommendations.\u201d In sum, the route is clear, but getting to the endpoint might still be arduous, as Alexander said.<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/binance-in-the-crosshairs-are-regulators-paying-attention-to-crypto\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Binance in the crosshairs: Are regulators paying attention to crypto? &#8221; Is Binance crypto\u2019s new whipping boy? Regulators in the United States, the United Kingdom, Canada, Japan, Thailand and the Cayman Islands have all recently issued warnings and even criminal complaints against the cryptocurrency exchange. Even Poland entered the fray as its financial regulator&#8230;<\/p>\n","protected":false},"author":1,"featured_media":294889,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDcvMGI5YWRlNWUtMWZjNS00Nzc3LTlhYjUtZmRkNDI2Nzc3ZmVlLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[75014,4973,20618,70934,67874],"class_list":["post-294888","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-binance","tag-china","tag-japan","tag-regulation","tag-united-states"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/294888","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=294888"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/294888\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/294889"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=294888"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=294888"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=294888"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}