Financial regulators around the world have targeted the major cryptocurrency exchange Binance. Some have banned the platform from certain activities, while others have warned consumers that it was not licensed to operate. Here are answers to some key questions about Binance, the world’s largest exchange in terms of trading volumes, as regulatory pressure mounts.
HOW BIG IS BINANCE?
By some measures, it is the largest platform in the world. July trading volumes were $455 million, nearly a third lower than a month earlier, amid cooler crypto markets but still number 1 globally, according to data from CryptoCompare.
Binance also leads crypto derivatives trading, with volumes exceeding $1.4 trillion in July — a 55 percent share of the total market.
Binance is headed by Changpeng Zhao, a Canadian known as “CZ”. The exchange offers a wide range of services to users around the world, from cryptocurrency spot and derivatives trading to loans and non-replaceable tokens.
It also operates a “decentralized” exchange that allows users to trade directly with each other. Its own cryptocurrency, Binance Coin, is the third largest in the world, with a value of approximately $68 billion in circulation.
WHERE IS IT BASED?
It’s not entirely clear.
Binance’s corporate structure is opaque. The holding company is registered in the Cayman Islands, according to British court documents and the Malaysian securities watchdog.
A Binance spokesperson has said that the company is “decentralized” and that it “works with a number of regulated entities around the world”.
Binance has built a massive following worldwide, with channels on the Telegram social media app for users in more than 30 countries.
Binance currently lists more than 1,000 job openings on LinkedIn, spanning from the UK and the Netherlands to Hong Kong, Singapore and Taiwan.
AND IT COMES UNDER THE CONTROL OF REGULATORS?
Yes – all over the world.
De Nederlandsche Bank said on Monday that Binance was not complying with the laws against money laundering and terrorist financing.
A range of other regulators — including those in Japan, Britain, Germany, Italy, Hong Kong and Malaysia — have also warned against Binance in recent weeks.
Binance is also reportedly under investigation by the US Department of Justice and the Internal Revenue Service.
The platform has said it takes its compliance obligations very seriously and is committed to complying with all legal requirements wherever it operates.
DOES CONTROL HAVE ANY IMPACT?
Binance doesn’t release any financial data, so it’s hard to say if it has hit its business.
Nevertheless, the stock market has taken a number of remarkable steps in the wake of regulatory pressure.
Binance CEO Zhao said last month that he wanted to improve relations with regulators. The exchange would seek their approval and establish a regional headquarters, he said.
Binance has also called back some of its range of crypto products for regulators to oversee.
Last month, it said it would end its futures and derivatives business across Europe, with users in Germany, Italy and the Netherlands among those affected first.
It also restricted trading of derivatives by users in Hong Kong, saying the move was “in line with our commitment to compliance”.
In July, Binance also stopped selling digital tokens linked to stocks after regulators cracked down on its “stock token”. It also said it would stop offering crypto margin trading with the Australian dollar, euro and pound sterling.
This week, the company appointed a former US Treasury criminal investigator as its global money laundering reporting officer.