Financial regulators around the world have targeted the major cryptocurrency exchange, Binance. Some have banned certain activities from the platform while others have warned consumers that it is not licensed to operate.
Here are answers to some key questions about Binance, the world’s largest exchange by trading volume, as regulatory pressures mount.
How big is Binance?
In a way, it’s the largest platform in the world. The trading volume in July was $ 455 million (roughly Rs 3,383 billion), almost a third less than the previous month, amid cooler crypto markets but still number 1 in the world according to data from CryptoCompare.
Binance also leads crypto derivatives trading, trading in excess of $ 1.4 trillion (roughly Rs 1.04.11.480 billion) in July – 55 percent of the total market.
Binance is headed by Changpeng Zhao, a Canadian known as “CZ”. The exchange offers a wide range of services to users around the world, from spot and derivatives trading in cryptocurrencies to loans and non-fungible tokens.
It also operates a “decentralized” exchange that allows users to trade with one another directly. Its own cryptocurrency, Binance Coin, is the third largest in the world, valued at around $ 68 billion (roughly Rs 5.05.725 billion) in circulation.
Where is it?
It is not very clear.
Binance’s corporate structure is opaque. His holding company is registered in the Cayman Islands, according to UK court documents and the Malaysian Securities Commission.
A Binance spokesperson said the company is “decentralized” and “works with a number of regulated companies around the world”.
Binance has built a huge following around the world, with channels in the Telegram social media app for users in more than 30 countries.
Binance currently lists over 1,000 vacancies on LinkedIn, spread from Great Britain and the Netherlands to Hong Kong, Singapore and Taiwan.
And is it being scrutinized by the regulatory authorities?
Yes – all over the world.
The Dutch central bank said Monday that Binance was failing to comply with anti-money laundering and terrorist financing laws.
A number of other regulators – including those in Japan, the UK, Germany, Italy, Hong Kong and Malaysia – have also warned about Binance in recent weeks.
Binance is also reportedly under investigation by the U.S. Department of Justice and the Internal Revenue Service.
The platform has stated that it takes its compliance obligations very seriously and is committed to following all regulatory requirements wherever it operates.
Does security have an impact?
Binance doesn’t publish financial data, so it’s hard to tell if it has hit its business.
Still, the exchange has taken some notable moves amid regulatory pressures.
Binance CEO Zhao said last month he wanted to improve relations with regulators. The exchange will get their approval and set up a regional headquarters, he said.
Binance has also withdrawn some of its crypto products that regulators may oversee.
Last month it announced it would cease its futures and derivatives business across Europe, with users in Germany, Italy and the Netherlands being among the first to be affected.
It has also restricted derivatives trading by Hong Kong users, saying the move is “in line with our commitment to regulatory compliance.”
In July, Binance also stopped selling digital tokens associated with stocks after regulators took action against their “stock token”. It also said it would stop crypto margin trading in the Australian dollar, euro and pound.
This week the company named a former Treasury Department detective as its global money laundering reporting officer.
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