The largest exchange for cryptocurrencies that is known for providing trading crypto tokens, Binance Holdings Ltd is being inspected by the US regulatory authority. The Commodity Futures Trading Commission is concerned that Binance permitted Americans to buy and sell crypto products in contravention with US regulations. This was revealed by anonymous sources who are individuals acquainted with the matter.
Binance is not registered with the Commodity Futures Trading Commission (CFTC). Thus, the regulatory authority is now deciding whether the company allowed trading of crypto byproducts that fall under the latter’s jurisdiction.
This latest scrutiny is the most recent sign that market overseers may impede the crypto market’s aspirations of becoming more conventional. As evident by facts, financial investors and businesses etc. are fondly investing in crypto. Top companies like America’s Tesla and China’s Meitu have also recently revealed that they’ve invested in crypto tokens.
The CFTC considers digital tokens such as Ether and Bitcoin to be commodities and claims authority over them and their offshoots. That implies crypto platforms face firm customer assurance and oversight requests if Americans are exchanging on them. While paying little heed to where businesses are based.
The founder of Binance, Chnagpeng Zhao clarified that the company carefully observed the US laws and rules. He further added that Binance had strong control over preventing its clients from laundering finances. However, he denied commenting on CFTC’s investigation against Binance, on an event held on a social platform.
He instead emphasized that the company would keep improving its compliance. He further added that they would in fact work with regulating authorities from around the world to develop the industry’s compliance standards.
Previously, Zhao was prominently known for creating a trading software with high frequency and founded Binance in 2017. Initially, the exchange was based in China, however, it decided to move out of the country due to China’s increasing regulation of cryptocurrency.
After the Binance investigation was reported, Bitcoin saw a slump of 1.6%, translating to about $56.685.02.
The US has been quite proactive at cracking down on cryptocurrency platforms with growing concerns over its misuse. BitMEX was already sued by the CFTC on account of failure to register as a broker. The company’s shares in the market also dropped owing to the investigation.
However, before the US regulatory authorities take strict measures against these platforms or companies it is important that clear legal regulations are in force. The US is still in the process of finalizing a clarification bill. The bill is expected to clearly differentiate between the Securities and Exchange Commission and CFTC’s jurisdiction with regard to digital assets. For a proper check and balance of the cryptocurrency, it is important that there is a legal procedure in place. Once the legislation is passed, the regulatory authorities and the crypto exchanges/platforms will have a much more methodical approach towards the digital asset.