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Binance Feels the Heat While a Regulatory Turf-War Brews in the U.S. – Regulation Weekly




This past week was a busy one with regards to enforcement actions and regulatory developments pertaining to digital assets.  While a turf-war between regulators appears to be ramping up in the United States, other nations are in the midst of enacting new rules, providing clarity for industry participants.

Regulatory Turf-War

Who should be in charge of regulating digital assets such as cryptocurrencies?  The Commodity Futures Trading Commission (CFTC), or the Securities and Exchange Commission (SEC)?  It would appear that even these two regulatory bodies cannot agree on an answer.

Soon after SEC Chairman Gary Gensler called for a ‘robust crypto regulatory regime’, both former CFTC Chair Chris Giancarlo, and current CFTC Commissioner Brian Quintenz, shared an alternative viewpoint.

While only time will tell which regulator assumes this responsibility, it is without doubt the SEC which has proven more vocal surrounding its views on digital assets to date.

Enforcement Actions

Binance, the world’s largest digital asset exchange, has come under serious fire as of late.  Not only has the platform announced that it is restricting access to its services within Ontario – Canada’s most populous province – it has now been given 14 days to shut down operations entirely in Malaysia.

In addition to completely shuttering operations in certain nations, Binance is also streamlining its operations in others.  More specifically, the exchange will no long offer derivative products in a variety of European nations, including the following to start,

  • Germany
  • Italy
  • Netherlands

It should be noted that Binance is not the only exchange finding itself a target of regulators.  Reports from South Korea this past week indicate that the nation’s Financial Services Commission (FSC) ordered 11 different exchanges to cease operations.

German Approval

A new law, which originally passed in July, came in to effect in Germany on August 2nd.  Excitement has surrounded this move, as is allows for institutional investors to invest up to 1/5th or 20% of their assets in digital assets.  If taken advantage of, this new ability could potentially see upwards of $415 billion find its way into crypto markets, with a large portion coming from pension funds.

In a recent conversation with Bloomberg, Tim Kreutzmann of the BVI, alluded that crypto markets would need to be patient for these inflows to occur.  He stated,

“On the one hand, institutional investors such as insurers have strict regulatory requirements for their investment strategies.  And on the other hand, they must also want to invest in crypto.”

This recent move by German regulators is simply the latest in a series of steps dates back multiple years.  While this most recent example pertains to digital assets such as cryptocurrencies, in mid-2020, we reported on a bill drafted surrounding the regulation of digital securities – often referred to as security tokens.