The government of the United States may be investigating crypto exchange Binance. There will be less competition for various exchanges due to the regulatory pressure on Binance.
Cryptocurrency exchange Binance has the highest trading volume on the market. However, its competitors are complying with regulations as a strategy to beat it.
That has caught the interest of its closest competitors, which include the brothers Winklevoss’ Gemini platform.
According to Bloomberg, Gemini co-founder Cameron Winklevoss recently highlighted the importance of complying with the demands of regulators. Thus, he noted that cryptocurrency exchanges have to play the long game.
The authorities of the current US government undertook new investigations of the business at Binance. The agencies participating are the Department of Justice, the Internal Revenue Service, and the Commodity Futures Trading Commission.
Cameron Winklevoss recommends that exchanges build robust systems to detect money laundering. Additionally, they suggest hiring government officials to advise them on regulations and enforcement.
There is a lot of regulatory pressure on Binance, and other exchanges struggle to comply with the regulations. However, Binance still ranks first when it comes to cryptocurrency trading.
Exchanges Could Be on Good Terms with US Regulators
American cryptocurrency exchanges could be on good terms with regulators very simply, according to Bloomberg. Those platforms should not offer regulated products like cryptocurrency-based derivatives contracts.
They should also avoid offering currencies that are a way to sell an investment in a business while circumventing regulations. Regulators specifically refer to such currencies as securities.
Compliance with the rules would allow institutional investors to use trading platforms and their custody services.
Due to all these developments, the competitive environment for cryptocurrency exchanges could change rapidly. Greater regulation would help market participants in the United States to take on business from offshore operators faster. That would happen specifically with decentralized finance (DeFI).
This technology has allowed developers to establish cryptocurrency exchanges that operate on computer code. That has helped users to exchange assets without the intervention of an intermediary.
Exchanges like Gemini, Coinbase, Kraken and Hotbit are waiting for Washington to set the rules. Gemini co-founder Cameron Winklevoss suggests discarding the US-based model and looking to expand abroad. In this regard, he noted that the American landscape is moving too slowly, so there is no time to waste.
Binance Faces Regulatory Challenges in Several Countries
Singapore, Japan, the Cayman Islands and Thailand are four examples of the several countries where Binance has faced regulatory challenges. In early June, Singaporean authorities stated they would evaluate the permits of the firm to operate.
The UK Financial Conduct Authority (FCA) also banned Binance Markets Limited (BLM) from trading crypto derivatives. The exchange is not authorized to conduct such activity on that territory but said it would commit to comply with all the regulations.
Earlier, Japan’s Financial Services Agency warned that Binance is not registered to operate in the country. Besides, the Malaysian government issued a notification about unauthorized activities that the exchange does in its territory.
This situation seems to be a good opportunity for other cryptocurrency exchanges to climb the ranking ladder. They are complying with regulations to avoid the problems Binance has been facing to increase their transaction volumes.
By Alexander Salazar