The news: The world’s largest crypto exchange will become a centralized entity to ease its compliance across jurisdictions, per Finextra.
How we got here: Since its launch in 2017, Binance has had no formal headquarters despite operating globally, which means it has struggled to obtain regulatory approval anywhere.
But over the past year, regulators have disrupted Binance’s operations by banning its services:
Under pressure from all sides, the crypto exchange is ramping up compliance efforts to ease regulatory concerns:
Our take: Booming crypto adoption is bringing in record revenues but also makes the industry top of mind among regulators, which is pushing market players to invigorate their compliance efforts.
In the US, Robinhood is doubling down on crypto features following a record Q2, during which crypto trading represented more than half of its transaction revenues. Coinbase also set a revenues record in Q2, while Binance saw a 65% surge in trading volume in September.
Higher trading volumes make it more challenging to monitor suspicious activity effectively, which is increasingly problematic as regulators ramp up oversight. In response, market players will turn to partnering or acquiring crypto regtechs to avoid operational bans that would slow their current growth.