25.07.2024

Binance is targeted by financial regulators

The world’s largest cryptocurrency exchange by trading volume, Binance, is targeted by the US Commodity Futures Trading Commission (CFTC) for potential trades by US clients.

Binance Holdings Ltd at the moment may become a defendant in the investigation of the financial regulator due to transactions with derivatives, which were allegedly carried out by American clients. Against the backdrop of this negative news, Bitcoin pulled back a little in price yesterday, but the pullback was never followed by a large collapse. What does all this threaten one of the main trading floors of the industry?

For starters, we note that Binance is indeed the largest cryptocurrency exchange in the world. For example, in February 2021, the total trading volume of coins on marketplaces was $ 1.19 trillion. Of these, Binance accounted for 760 billion, that is, significantly more than half.

In March, approximately the same picture is observed. Here’s a graph from The Block.

crypto exchanges trading

Trading volumes of cryptocurrency exchanges

In this regard, such interest from regulators may pose a danger to the entire coin industry. However, if you believe the statements of experts, there is nothing to worry about in this case.

What will happen to Binance?

The exchange has not yet been accused of any violations, however, according to sources, now regulators are trying to determine whether derivatives trading instruments for cryptocurrencies were bought and sold by US citizens on this platform. Americans are prohibited from doing this.

Here is a quote from a Binance representative from an interview in which he shared his opinion on what is happening. The replica is provided by Cointelegraph.

We do not comment on communication with any regulatory authorities. What we can say is that we take a collaborative approach to working with regulators around the world and take our obligations to comply with their rules very seriously.

That is, the representatives made it clear that the situation is under control.

Bitcoin cryptocurrency chart

Despite all the negative news, Bitcoin continues to hold above the level of 56 thousand dollars

A similar point of view was voiced by the head of the exchange, Changpeng Zhao. According to him from Twitter, one cannot do without FUD – that is, fear, uncertainty and doubt – at the stage of growth of the cryptocurrency market. Therefore, he recommended that such news be ignored.

In addition, Changpen shared a screenshot that highlighted that «Binance is not charged with any wrongdoing.»

Changpeng Zhao Binance

Changpeng Zhao’s commentary

And although the market practically did not react to the event, the value of the Binance cryptocurrency exchange dipped slightly. BNB is now valued at $ 266, down 4.9 percent from a day ago. The moment of the rate collapse against the background of the news release is noticeable on the daily chart.

bnb chart rate

BNB rate chart per day

The news was also commented on by renowned trader Josh Rager.

This shouldn’t be a big deal, given that Binance US follows the rules and doesn’t allow derivatives trading. Also, judging from past experience, Binance denies access to any user with an IP address from the United States.

As a reminder, trading in derivatives for cryptocurrencies soared to new heights in early 2021, with the volume of transactions on Binance for these instruments reaching $ 59 billion . This figure is at least twice that of the closest competitor Huobi Global.

Binance itself does not seem to be going to ditch its American customer service in any form. At almost the same time as the negative news, the platform announced that Max Baucus, a former Democratic senator from Montana, had been included in its government relations advisors. Baucus will consult with regulators and the US legislature on policy issues that will help develop not only Binance, but the broader ecosystem of platforms in the cryptocurrency industry .

Max Baucus US Senator

Max Baucus

Baucus himself, who chaired the Senate Finance Committee from 2007 to 2014, suggested that the revolutionary power of cryptocurrencies and blockchain has attracted him to his new position. Here is his line, quoted by Decrypt.

I am honored to help navigate the complex policy and regulatory frameworks that are key to wider adoption of new financial technologies.

One way or another, negative news from Binance had almost no effect on the market. We believe that investors are now in the mood for a long-term continuation of the growth phase and updating historical highs for Bitcoin and other coins. Therefore, such news, which in this case does not prove that the exchange has problems, is not able to drop BTC and create serious problems for the niche. We hope this will continue in the future.

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