Binance and Government Regulation: No Cause for Concern?
Governments have been scrutinizing the crypto industry for the past few months. After China’s ban on Bitcoin, other nations started taking issue with Binance, a leading crypto exchange. In June, the UK prevented Binance from running regulated activities within their borders. The UK government stated that Binance failed to meet its anti-money laundering conditions.
The Thai government took issue with the company doing business in their country without their approval and introduced criminal charges against Binance. In Canada, the Securities Commission charged Binance with not following local trade regulations.
Such scrutiny is no cause for concern over Binance’s future. Government regulation is typical for new industries like crypto. A young company, they are still making adjustments. Regulatory compliance isn’t something that happens overnight but is a process. There is still plenty of room for improvement, and Binance is ready to make the necessary changes.
What Binance is Doing About It
Binance’s founder Changpeng Zhao says his company is ready to cooperate with governments to ensure the safe and legal use of their platform. They are also hiring more staff to protect users and enforce new security regulations. They are also working with government agencies to reduce criminal activity on their platform.
Binance is making regulatory compliance a priority as it continues to evolve. What was once a blockchain startup has morphed into a financial services company. Binance is doing all it can to become a licensed, compliant institution in all countries where it operates. To this fact, their CEO Zhao stated, “Compliance is a journey, especially in new sectors like crypto. The industry still has a lot of uncertainty. We also recognize that with growth comes more complexity and more responsibility.”
Binance is also bolstering its legal team by hiring more staff with regulatory experience. Binance announced that they have increased their compliance team by 500% in response.
As with any new industry, government regulation can be an issue. A major concern for world governments is crypto’s ease of use for criminals. Crypto can be a useful way for individuals or organizations seeking to launder money. Governments seek crypto regulation to make transactions transparent and account for all blockchain activity.
Binance has started to enforce stiffer background checks to prevent money laundering. Such measures also increase user protection and fight financial crime. Until recently, document-based ID verification was only necessary for high-volume traders.
ID verification among crypto exchanges varies. Some only need an email address to start trading. Others require personal information for limited transactions. Binance’s new verification policy demands users submit their driver’s license or passport. If users don’t submit the necessary documents, they won’t be able to trade. These new measures are a major change in direction for Binance.
A Centralized Business Model
Binance also plans to remodel its business structure to ensure regulatory compliance. Until now, the exchange has had a decentralized structure without a headquarters. Now, they are switching to a centralized structure with CEOs heading each country they do business in. Although this opposes the decentralized crypto movement, stricter government regulations require such restructuring.
At bRing, we believe that standardized regulation policies with the public’s benefit in mind should be implemented to a certain degree. As we have seen, Binance is seeking to meet regulatory demands. With new security measures under full swing, Binance is evolving into a more mature, responsible company paving the way for crypto mass adoption.