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Binance & Regulations: A Year in Review

Regulators tightened the regulatory noose on Binance in 2021 but with regulatory clarity, 2022 might turn out to be promising

Localizing Operations

2021 was a harsh year for Binance from a regulatory perspective. Regulators around the world applied some level of restriction and demanded compliance. Some regulators proceeded to list Binance in their ‘Investor Alert List’ as an entity that is not licensed to carry out regulated activities.  

Banks and financial institutions started to restrict deposits and withdrawals to the platform’s local bank account as a result. This led to the departure of users to other licensed crypto exchange platforms.  

Binance has been operating from an incorporated company in the Cayman Islands known as Binance Holdings Limited. The entire operation of Binance was not headquartered in a particular jurisdiction. 


Binance was forced to adopt a different approach as local regulations started to apply to crypto assets. On Binance’s fourth anniversary, its Chief Executive Officer (CEO), Changpeng Zhao (CZ) outlined the platform’s aspiration to meet the regulatory challenges. One of the steps identified was to localize Binance’s operations. 

Source: CZ recognizes that Binance has to adapt as crypto becomes mainstream

The following is a recap of the regulatory efforts and challenges in 2021: -


North America


United Kingdom 

Europe

  • Germany’s financial regulator warns Binance over its ‘stock tokens’ as it deems these tokens as ‘security offerings’.
    Dutch Central Bank issues warning to Binance and cites illegality.
  • Binance hires Martin Bruncko as its Executive Vice President to lead its compliance efforts in Europe. 
  • Binance eyes France as a ‘natural choice’ for its Europe expansion plans.


Asia

Source: Binance was given 14 days to disable access to its platform and mobile application to its Malaysian users

Long and Winding Road

The road to compliance is a long and winding one. Binance has adopted an inclusive approach towards regulations. In a recent Frequently Asked Question (FAQ) series published on Binance’s blog, CZ declares that Binance welcomes mutual cooperation with regulators worldwide to structure a compliance framework for centralized exchanges. 

Source: Binance seeks to convince regulators that its current standard of best practices can contribute to a healthy and thriving industry

Binance’s effort to woo regulators worldwide would likely bear fruits in 2022. There may be further conditions imposed but it is unlikely that these conditions will be crippling. Governments around the world are starting to realise the need to embrace the crypto revolution. The best foot forward is to ensure that a responsible and compliant central exchange is a friendly party.

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