Binance, the world’s largest cryptocurrency exchange, is experiencing unprecedented regulatory scrutiny.
Behind this is that the global regulatory standards of the entire digital encryption currency industry are tightening, and the tightness of regulation will directly determine the success or failure of the entire market.
01. Global Supervision “Encirclement and Suppression”
On Friday, local time, the Thai Securities Regulatory Commission filed a criminal lawsuit against Binance , accusing Binance of operating digital asset business in Thailand without obtaining a business license.
The Thai Securities Regulatory Commission stated that only licensed companies can provide services related to digital asset transactions in Thailand. It issued a letter to warn Binance in April this year , but did not receive any response.
The Cayman Islands’ regulator, the Cayman Monetary Authority (CIMA), announced earlier on Friday that it is investigating whether Binance and its affiliates have operations in the Cayman Islands that are regulated by CIMA.
CIMA expressed the hope that the public would understand that although the media claimed that Binance is a cryptocurrency exchange company registered and established in the Cayman Islands, Binance is not registered with CIMA, has not been authorized by CIMA, and does not hold a license issued by CIMA. Not regulated by CIMA.
This is just a small part of the recent global regulatory review that Binance has undergone.
In Asia, Singapore’s financial regulator said on Thursday that it will review Binance’s Singapore subsidiary after the parent company of Binance Holdings (Binance Holdings) is reviewed by regulators around the world.
The Financial Services Agency of Japan (FSA) previously issued a formal warning letter, stating that Binance Holdings Limited, a subsidiary of Binance, operates digital asset trading businesses without being registered in Japan. Binance was warned for the same reason in March 2018.
In Europe, the British Market Financial Conduct Authority (FCA) stated on its official website on June 25 that Binance Markets, the holding company of Binance in the United Kingdom, shall not carry out any FCA-regulated financial business in the United Kingdom , nor can it provide it to individual customers. loan service.
In North America, Binance told company account holders that Ontario will be included in the scope of “restricted jurisdictions” starting June 26, and customers in this province are advised to close their own accounts before December 31 this year. transaction account.
The latest action against Binance shows that the exchange cannot circumvent national laws by operating in other jurisdictions. Investors need to use a cryptocurrency exchange licensed by the country/region in which they are located, so as to avoid the risk of assets being frozen or even confiscated.
02. Tightening of global digital encryption currency regulatory standards
Market analysis believes that the regulatory actions of various countries are not just a single act directed at Binance. The regulatory standards of the entire digital encryption currency industry are tightening, which will directly determine the success or failure of the entire market.
Proponents of digital cryptocurrency argue that any regulation violates the decentralized spirit of cryptocurrency.
The origin of Bitcoin is that it excludes intermediaries—banks and governments—from financial transactions. Various regulatory measures may make digital cryptocurrency return to the old way of the middleman.
At the same time, it is difficult for digital cryptocurrencies to completely get rid of the existing decentralized system.
But those who are in favor of strengthening supervision believe that if countries introduce reasonable encryption regulations, this can actually help the industry. Increased consumer confidence in digital currency and cryptocurrency transactions may encourage more people to buy and participate in cryptocurrencies.
The lack of supervision has caused the digital currency industry to be deeply involved in regulatory disputes over money laundering and taxation issues.
Take Binance as an example. The Japanese cryptocurrency exchange Fisco filed a lawsuit against Binance in a US court last September, claiming that Zaif (now acquired by Fisco) was hacked in 2018 and lost $63 million in cryptocurrency. , Binance provides convenience for hackers to launder money.
Fisco stated in the indictment that a Bitcoin address was traced through on-chain analysis. The hackers washed 1451.7 Bitcoins from this address through Binance. Binance had the ability to freeze the account and block transactions, but due to the lack of Binance Action, Zaif’s customers and the exchange itself suffered financial losses.
In addition to money laundering, stablecoin (Stablecoin) is also a matter of great concern to supervision.
Stable currency is a virtual currency that anchors stable-value assets such as the U.S. dollar. This virtual currency can facilitate the transaction from one cryptocurrency to another.
Tim Swanson, founder of the consulting firm Frim Post Oak labs, said that stablecoins are “parasitic” and operate like non-bank financial intermediaries, providing services similar to traditional commercial banks, but outside the scope of normal bank supervision.
Critics claim that the growth of stablecoins such as Tether, USD Coin and DAI poses a major risk to financial stability. Some tokens linked to the U.S. dollar are not backed by actual U.S. dollars, but are backed by riskier asset portfolios.
From the perspective of regulators, it seems that it is only a matter of time before the digital currency is fully incorporated into the existing regulatory system.
Gary Gensler, chairman of the US Securities and Exchange Commission, has repeatedly discussed the need to strengthen the supervision of cryptocurrency exchanges to protect investors. It believes that among the thousands of existing cryptocurrencies traded on exchanges, many are unregistered securities and should be subject to the enforcement of the SEC.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/the-global-encirclement-and-suppression-binance/
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