Leading global cryptocurrency exchange Binance has acknowledged the significant hurdles it faces conducting business in the U.S. due to the intensified cryptocurrency regulations in the country.
The company finds the current situation “very difficult” and aims to seek regulatory compliance in the UK as an alternative solution.
During the crypto and digital assets summit hosted by the Financial Times, Binance’s chief strategy officer, Patrick Hillmann, voiced his view on the state of affairs in the U.S. over the past six months.
Hillmann highlighted the actions of the Securities and Exchange Commission (SEC) against Coinbase, a competing exchange, on allegations of violating securities laws. He emphasized that these events indicate the current peculiar situation in the U.S. in regards to regulation.
Throughout this year, Binance has come up against heightened scrutiny from U.S. regulators who have taken action against the company due to suspected illicit activities.
But Binance isn’t the only crypto organisation to be put under the microscope. Just yesterday here at Cryptobetting.org, we brought you news that Jane Street and Jump Crypto are also scaling back their US-based activities in the wake of growing pressure from American regulators.
In March, the Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance, its CEO Changpeng Zhao and its former chief compliance officer. The agency accused the platform of soliciting users in the U.S. and enabling them to carry out derivative trading without proper authorization.
The Department of Justice also identified Binance as a counterparty to Bitzlato, a cryptocurrency exchange whose founder faced charges for illegally transmitting significant amounts of cryptocurrency funds, violating U.S. money laundering regulations.
Hillmann downplayed the potential impact of U.S. enforcement actions on Binance’s operations. He believes the U.S. would eventually seek to align with Europe’s regulatory approach.
He mentioned the recent passing of Mica, the EU’s crypto asset regulation, as a significant advancement and implied that the U.S. would need to catch up to remain competitive.
Although Binance aims to turn to the UK for regulatory compliance, the exchange has had a history of conflicts with regulators in London. The Financial Conduct Authority (FCA) previously accused Binance of being incapable of regulation, due to its failure to provide sufficient information about its business operations.
Initially established in China, Binance moved its headquarters away from the country. While it has a holding company in the Cayman Islands, Binance has refrained from disclosing the specific location of its headquarters.
In 2021, the FCA issued a mandate for the company to halt all regulated activities within the UK. Additionally, last year, a joint venture partner raised allegations against the company for submitting a highly inaccurate annual report regarding one of its UK entities.
Following the ban imposed by the UK’s FCA, Binance has tried to mend its relationship with UK regulators. According to a Binance representative, the company is complying with money laundering and terrorism financing regulations in the UK. However, whether or not the FCA will considering letting the exchange return to its previous activities in the UK remains to be seen.
According to Bloomberg, Binance’s market share appears to have diminished due to changes in its trading-fee structure and the increased regulatory scrutiny imposed by U.S. authorities on the cryptocurrency industry.
Dessislava Ianeva, a senior research analyst at Kaiko, said that Binance now holds approximately 50% of the spot market share, marking its lowest level since April 2022. This decline in market share occurred after the platform eliminated zero-fee trading for specific pairs in March.
According to Ianeva, there is a possibility that certain institutions are adopting a cautious approach and refraining from active participation in the market due to the prevailing regulatory landscape. They may remain on the sidelines or allocate fewer funds to alternative trading platforms.
Meanwhile, CCData reports that Binance’s spot market share has returned to levels observed before the November decline experienced by its competitor FTX. The exchange’s spot trading volume experienced a significant drop of 48 percent, amounting to $287 billion in April. This number represents the second-lowest monthly trading volume since 2021. The overall market share of Binance has also experienced a decline, as revealed by the data provider.
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