Under close regulatory scrutiny, Binance.US, the biggest cryptocurrency exchange worldwide, can lose control on the profitable US market. Rising licence revocations and operational restrictions across several countries present an upsetting view of the future of the trade.
Money Transmitter Troubles: The Holding Penalty
The main issue is money transmitter licences, which are required for legal functioning of exchanges. The most recent state to flag Binance.US is North Dakota’s Department of Financial Institutions (DFI) citing non-compliance with local laws and infringement of money transmitter regulations.
This follows similar policies taken by Florida, Alaska, Oregon, Maine, and North Carolina. Authorities point to the guilty plea of Binance founder Changpeng Zhao in November 2023 to evidence of money laundering, therefore proving the illegal nature of the trade.
Source: State of North Dakota, Department of Financial Institutions
The DFI Commissioner, Lise Kruse, underlined the need of preserving public interests. “The Commissioner finds the Respondent does not meet the qualifications or satisfy requirements that may apply to an applicant for a new money transmitter licence,” said Kruse. Binance.US is thus basically denied a licence in North Dakota once more, adding yet another state to its growing list of “penalty boxes.”
Beyond The Border: Global Woes Spillover
The state of affairs in the US resembles global mistakes made by Binance. Making matters worse for Binance.US are reports of a similar administrative conflict involving the Nigerian government that resulted in the incarceration of an executive. Reading these accounts will surely make US officials worried.
Total crypto market cap at $2.3 trillion on the daily chart: TradingView.com
A Long Yard To Go: Can Binance.US Recover?
Growing restrictions make it challenging for Binance.US to keep competitive. In more than ten states today, the exchange is entirely inaccessible and is unable to register new clients in several areas. Things are not looking good even though Binance.US has until July 17, 2024, to challenge North Dakota’s decision.
Moreover, Zhao’s rather brief jail term suggests that Binance may go in another path. The future of the exchange hinges on its ability to fix the mistake and carry out a good strategy grounded on constant regulatory compliance.
This important point underlines how constantly the regulatory scene around cryptocurrency is shifting. While cryptocurrencies clearly have immense potential for innovation, exchanges have to go by guidelines to keep confidence and stability of the market. The whole crypto industry will be closely watching Binance.US’s struggle and using its results as a guide for platforms that value speed above compliance.
Featured image from Migration Navigator, chart from TradingView