The Binance Regulation Apocalypse

Regulators are clamping down on Crypto Trading platforms

This is the first installment of our news Newsletter, Crypto Bulls and Bears, you can subscribe to it here.

Even as China purges Bitcoin mining, Bitcoin's price is somehow above $30,000. It should go down to as low as the $11,000 to $14,000 range eventually, but what do I know? I watch companies like Binance and Bitmain quite closely.

Binance is having a terrible crisis of trust with regulators in the U.K., Japan and Ontario, Canada. "Binance can no longer continue to service Ontario-based users," the exchange said Friday. Binance customers, unable to withdraw, deposit pounds via UK's Faster Payments, according to the FT.

Britain’s Financial Conduct Authority said that Binance Markets Limited “is not permitted to undertake any regulated activity in the U.K.” Even as Coinbase soars in its IPO, it's more innovative competitor Binance is having serious legal and regulatory issues globally in a recent crackdown. From June 30, Binance must notify U.K. users of the FCA’s restrictions in a prominent place on its website and apps. It’s the latest sign of a growing crackdown on the cryptocurrency market from regulators around the world and it could get worse in the 2nd half of 2021.

I don't fully understand how Binance could have been so negligent. Japan’s top financial regulator, the Financial Services Agency (FSA), issued a warning notice to Binance Holdings Ltd. and CEO Changpeng Zhao on Friday. The notice states that Binance has been providing crypto exchange services to Japanese customers without registration. What are you doing, Binance?

It appears Binance has failed to go through even the most basic registration processes in multiple countries. The FCA does not regulate cryptocurrencies, but requires exchanges to register with them. Binance has not registered with the FCA and therefore is not allowed to operate an exchange in the UK.

UK, Japan, Canada all pointing to the same things. Binance's withdrawal follows the publication of a Statement of Allegations last week against Bybit by the Ontario Securities Commission (OSC), which accused that crypto exchange of failing to comply with provincial regulations. Ontario is the biggest province of Canada.

Binance, the world’s largest crypto exchange by trading volume, was set to launch its own digital asset marketplace in Britain. What a massive missed opportunity! With Coinbase maturing in its IPO, a Facebook Diem pilot coming soon and China's digital Yuan in motion, Binance has to launch better iteration of DeFi and crypto trading soon. It cannot make such amateurish mistakes.

“Binance Markets Limited withdrew their 5MLD application on 17 May 2021 following intensive engagement from the FCA,” a spokesperson for the FCA told CNBC. “The action taken today on Binance Markets Limited has been in train for some time.” It's not clear what Binance is doing. I have no insider insight into such transgressions in a time when Bitcoin hype is really high again It's just awful timing.

Japan’s Financial Services Agency warned last week that Binance was operating in the country without its permission. With Bitcoin's market cap rising, stricter regulatory frameworks are a massive risk. Binance is a very innovative company but is still tied to all of crypto's bad reputation such as money laundering.

Increased regulatory scrutiny has weighed on the nascent crypto market. Bitcoin had a solid start to the year, rallying to an all-time high of almost $65,000 in April. I think Bitcoin will go back down to $14,000 in 2023. This is just your regular Bitcoin bull market, not some permanent climb up to crypto Gods and pyramid scheme oblivion. Bitcoin and crypto just perpetuate wealth inequality, no matter how secure, private or decentralized the tech behind it is.

Binance.com is an online centralized exchange that offers users a range of financial products and services, including purchasing and trading a wide range of digital currencies, as well as digital wallets, futures, securities, savings accounts and even lending. It has a 25% chance of becoming the DeFi leader of the 2025 to 2035 period. However it's not doing a great job with regulators and from a legal standpoint in 2021.