Binance’s compliance ‘journey’ gets bumpier as another partner backs out
- Global payments solutions provider Clear Junction has joined Barclays and Santander in refusing to process transactions for
- This comes after Binance is already facing a blanket ban in the UK and warnings in Thailand, Canada, and Japan.
- The ‘journey’ of compliance as cited by the company’s CEO seems to be getting bumpier as the world’s largest
cryptocurrencyexchange tries to keep its head above water
AdvertisementChanpeng Zhao, the CEO of Binance — the world’s largest
The latest addition to Binance’s avalanche of problems is the split from global payments solutions provider Clear Junction. The company revealed that it would no longer process transactions for Binance. Both, payments in pounds and euros, are now down for deposits or withdrawals.
Barclays and Santander announced similar measures after the regulator barred Binance from operating in the UK.
The world's largest crypto exchange is now under the scanner as authorities globally explore their options. Binance has spread its business virtually everywhere and continues to enjoy full autonomy — a feat that's achievable because of cryptocurrencies and their inherently decentralised nature.
So far, the company has been penetrating borders and reaching users unlike ever before, but the regulation-free good times may gradually be coming to an end.
Based out of a tax haven with an obscure corporate umbrella.
Binance has a slew of problems up its sleeve — the UK's Financial Conduct Authority (FCA) has banned it from carrying out regulated activities in the country. If that wasn't enough, regulators in Canada, Japan and Thailand have also issued warnings to the exchange.
Many regional authorities have asked it to add a notice on its website and app informing users that the trade isn't regulated. And, while most countries have imposed mild restrictions, China has booted out all exchanges in a not-so-pleasant way — including Binance.
Binance was originally founded in China by Canadian Changpeng Zhao but was forced to move out during the 2017 crackdown by the authorities. Since then, the exchange has been based out of the Cayman Islands, a sovereign region infamous for being a tax haven.
However, the Cayman Islands Monetary Authority (CIMA) has disclosed that the company is not registered or licensed by the regulator to operate under its jurisdiction. So, while Binance may be operating as a business out of the Caribbean, it still doesn't have any financial watchdog's blessing.
That's not all; Binance has an opaque corporate structure. When asked by Reuters to clarify, its spokesperson gave a vague response saying it was ‘decentralised’ and that it ‘works with a number of regulated entities around the world’.
If your investment goes wrong, your only recourse may be to fly out to the Cayman Islands
Since the company is based out of the Cayman Islands, the implications of the law get a little complicated. According to a report by the Wall Street Journal, close to 750 traders are working with a lawyer in France to take action against the exchange.
The problem is that one can't sue the company if they don't know where it's located and the Cayman Islands are nothing more than a mentionable address. There's no call-based support centre, the web is filled with fraudulent emails that try to scam unalert users, and grievance protocols are next to zero.
Amid the piling criticism, Binance has revealed plans to double the size of its compliance team by the end of 2021. The company claims to have added new controls and regulation technology with partners such as CipherTrace to instil further protection for its users.
AdvertisementSouth Korea is among the first to legitimise crypto adoption, but it has established stringent norms on crypto companies to ensure there's no notoriety. It includes close intelligence monitoring, identity authentication, and safekeeping of assets by a conventional bank.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
South Korean banks are creating custody companies to deal with cryptocurrencies — without having to touch the asset itself
El Salvador’s crypto-friendly plans are facing some important questions
The World Bank, IMF and BIS push for central bank cryptocurrencies to improve cross-border payments
Popular on BI
- Vikrant Massey's 12th Fail crosses ₹50 crore-mark at box office
- Virat Kohli to take a break from white-ball games on South Africa tour; to be available for Tests: Report
- Gold prices soar to 7-month high
- I-T dept conducts survey at some entities of Hinduja Group
- FPI stake: Coforge, IDFC First Bank and Patanjali Foods see highest increase in Sept quarter