Many predict that Binance will never accept regulation – it will only pretend to comply with the rules of jurisdictions such as the United States.
no longer.
Binance plead On November 21, the company was indicted on money laundering and other federal charges, meaning it abandoned its free-to-start approach. It will also pay a $4.3 billion fine, the largest in the history of the U.S. Treasury Department.
Additionally, Changpeng Zhao (CZ), the founder, CEO and principal owner of Binance, considered by many to be the most powerful person in the cryptocurrency space, will exit the company for at least three years following the appointment of a court-appointed monitor. Year.
Today, I resigned as CEO of Binance. Admittedly, letting go emotionally is not easy. But I know it’s the right thing to do. I made a mistake and I must take responsibility. This is what’s best for our community, Binance, and myself.
Binance is no longer a baby. This is…
— Czech BNB (@cz_binance) November 21, 2023
But these may not be the most important impacts.
Milton R. Underwood Chair Yesha Yadav, professor of law and associate dean at Vanderbilt University School of Law, told Cointelegraph that “the settlement is much larger.” He added:
“It will bring some systemic oversight to Binance through a regulatory agreement, marking the end of an era when the exchange was able to operate in a relatively borderless manner, without a headquarters and seemingly without a major domestic regulator.”
Yadav went on to say that this will subject Binance to more “scrutiny than ever before on its products, risk management, governance, trading partnerships and compliance rigor,” and that the exchange could undergo significant structuring reforms to put it on a more compliant footing.
Binance’s agreement with the U.S. Department of Justice (DOJ), Treasury Department, and Commodity Futures Trading Commission (CFTC) should have an impact on the industry as a whole, but not necessarily in a negative way.
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Austin Campbell, founder and managing partner of Zero Knowledge Consulting and an adjunct professor at Columbia University Business School, said that in fact, the deal is “long-term positive” for the cryptocurrency and blockchain industry. He told Cointelegraph:
“This acknowledges that cryptocurrency is here to stay and people should be able to use it.”
It’s arguably a landmark event for the industry, in part because stateless Binance, the world’s largest cryptocurrency exchange that at times handled two-thirds of all digital transactions, reached a separate plea. Protocol’s Zhao is seen by many as the face of the industry, especially since the downfall of FTX’s Sam Bankman-Fried.
“We will find you”
“Only the United States can do this, and the extraterritorial application of its laws is proven and quite unique,” Markus Hammer, a Swiss lawyer who heads the consulting firm HammerExecution, told Cointelegraph. “A signal to the crypto world. It couldn’t be clearer,” he added:
“If you target U.S. users and actively engage in money laundering and circumvent U.S. sanctions on cryptocurrency businesses, we will catch you. We will catch you, including your CEO, even if you have no registered headquarters. “
However, Binance may not be completely out of the woods yet when it comes to U.S. federal charges. Separately, the SEC filed 13 charges against Binance in June, and these cases are pending. Furthermore, Carol Alexander, a finance professor at the University of Sussex, told Cointelegraph that the charges are “much broader than those brought by the Department of Justice, the U.S. Commodity Futures Trading Commission and the Treasury Department.”
Alexander observed that Binance has evolved into a multi-functional organization that extends well beyond its trading activities.For example, it has a non-fungible token market and conducts market-making activities through two companies controlled Author: Zhao: Merit Peak and Sigma Chain.
The SEC accused Binance and Zhao of commingling the client assets of these market-making firms and taking those client assets as their own, which sounds a lot like FTX’s practices before its collapse. However, Alexander noted that it will be some time before these latest cases are heard.
Paving the way for cryptocurrency exchange-traded funds (ETFs)?
Nonetheless, the Justice Department’s plea agreement appears to bring some relief to the cryptocurrency industry. Some worry that governments may try to bankrupt Binance and fear global consequences due to the company’s ubiquity.So reconcile eliminated There is a lot of “suspense” in this view in the market.
Throughout last year, Binance was the biggest particular hurdle in this market. It looks like we may finally get some solutions.
Markets hate uncertainty and like clarity and solutions.
Similar to the 2020 Bitmex resolution.
— Will (@WCClementeIII) November 20, 2023
“I think the clarity the authorities are now providing on this deal is very positive for the entire crypto industry,” Hamer said. “This should also pave the way for a (U.S.) BTC spot market ETF, which could launch in January 2024.” It will be launched in March, and perhaps an ETH spot ETF will be launched later this year.”
Others see the settlement as another sign that the industry is maturing and moving beyond its pirate origins.
Campbell said the Binance of 2018 was very different from the Binance of today.it evolved from his stuff is called From “a business that evades piracy” to one that “has well-established KYC/AML programs and risk professionals in some jurisdictions.”
“Binance has been committed to doing the right thing for some time,” Campbell told Cointelegraph, citing people like Zhao’s successor Richard Teng and chief compliance officer Noah Perlman. ) serve as examples of an increasingly serious attitude toward compliance. and supervision. The Justice Department settlement “is just another step down that path.”
Truflation founder and CEO Stefan Rust said in a statement last week that just as the early pioneers of the Internet eventually integrated into major markets and economic systems, “cryptocurrencies have also entered people’s horizons.” “Comprehensive regulation and taxation are now here.”
Zhao himself seems to see things coming in 2021, saying in an open letter that regulation often lags behind innovation, especially revolutionary technologies such as cryptocurrencies. “The adoption and development of cryptocurrencies has many similarities to cars. When cars were first invented, there were no traffic laws, traffic lights, or even seat belts.” These came later.
Let Binance survive?
Some also see a conscious decision by the U.S. government in the Justice Department settlement no Let Binance go bankrupt. Campbell said:
“One of the biggest negatives for the (crypto) space and the United States is that regulators accept the goal of a crypto ban. Quite the opposite is true: the settlement agreement makes it clear that Binance continues to exist.”
“A reformed Binance could benefit the entire cryptocurrency industry by providing a source of private standards-setting and representing a more mature, prudent organization to the world,” Yadav said.
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Maybe this is too much. Prior to the plea agreement, Binance’s dominance in the industry had been waning, and that trend is likely to continue, especially as the SEC case and its broader charges remain pending.
Yadav acknowledged that Binance may also lose market share over time as risk-seeking consumers gravitate toward smaller offshore exchanges, while adding:
“But this settlement offers a possible path for Binance to shed its image as a risk-tolerant company that gains market share by aggressively courting customers at all costs.”
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