The world’s biggest crypto exchange is being struck by wave after wave of regulatory activity. The most recent occurred when Australian regulators searched Binance Australia offices. According to sources familiar with what is going on with Binance, officials of the Australian Securities and Investments Commission went to more than one Binance office investigating Binance’s now-defunct business in local derivatives. Regulators in the US, EU, and now Australia are creating a business slowdown for Binance as part of their actions.
Legal Effects of Binance Regulation
There are two issues for Binance in regard to the successive waves of regulatory activity across the world. First of all, Binance will have to deal with the specifics of licensing. They will have to separate parts of their business such as broker-dealer activities, clearing house functions, trading activities, and more. These things will work out over time. What is already happening is that business associates and customers are looking elsewhere for crypto exchanges with less drama attached to them. Banking partners are dropping Binance and customers are simply going elsewhere. After four months of contractions, Binance’s share of global trading has now fallen to 42%.
Australian Review of Binance’s Business
The current issues that the Australian Securities and Investments Commission has with Binance have to do with its derivatives operation in the country. Details such as classification of wholesale versus retail clients are an issue. The ASIC has already canceled Binance’s derivatives license but the investigation appears to still be progressing. Binance’s response to all of this is it is disappointing as they have always complied as best they could with rules and regulations.
Binance Becomes Isolated from Fiat Currencies
The fallout from regulatory issues for Binance includes the loss of banks and bank transfer services. For example, Paysafe Ltd. will stop supporting euro bank transfers with its Single Euro Payments Area network starting in September 2023. They have already stopped supporting transfer of pound sterling to and from Binance. US banks stopped making transfers for Binance in June of 2023 via the US banking system.
Binance Trouble in France
The visits by Australian authorities to Binance offices there were preceded in France by similar visits by authorities. The issues in France appear to be acts of aggravated money laundering and illegal provision of digital-asset services. Binance says they abide by all rules and regulations everywhere that they operate. As with issues in Australia and the US, Binance says it is disappointing that regulators appear to disagree with them. What is happening with Binance customers is that they are finding Binance’s problems disappointing as well and are seeking other venues to trade cryptocurrencies.
Choices for Binance as Regulatory Waves Continue
Binance will have two options as regulators close in. They can start to comply with the rules in the jurisdictions where they operate or they can watch their operations continue to shrink. Much of what is going on in crypto regulation has to do with monetary losses during the depths of crypto winter. Investors and traders generally accepted the fact that markets go up and down and the crypto winter was a down market. What folks were not amused with were the business collapses related to sloppy business practices. Even more so crypto investors were angered by repeated cases of fraud at the heart of big crypto businesses like FTX. Thus public and government regulator sentiment converged. Now we are seeing waves of regulatory activity sorting out crypto businesses across the globe. Binance is only one of the targets of regulators.
Wave of Binance Problems Reaches Australia – SlideShare Version