For even the most inexperienced cryptocurrency traders out there, the name Binance is a household one. For a few years now, Binance has been the go-to trading platform for crypto enthusiasts the world over, but especially in the United States. Now, the CFTC, or Commodity Futures Trading Commission, is looking into whether Binance violated US regulations regarding the buying and selling of derivatives on the site. The fact that Binance is not registered with the CFTC could play out interestingly, because if it were offering the sale of derivatives, this would be a major violation.
No Legal Action Taken, Yet
While this news is alarming, it is important to note that this is merely a probe, and that the ongoing investigation may amount to nothing. As of the writing of this post, no charges were being filed
The reason this story is a big deal has everything to do with the US Government’s recent push to keep any eye on the unregulated crypto space. For years now, organizations such as the IRS and SEC have not really had any control over the buying and selling of cryptocurrencies like Bitcoin and Ethereum. More recently however, these same groups have publicly stated that the paradigm will begin to shift, and that it will soon be much more difficult to buy and sell cryptocurrencies without letting the government know what you are up to. This story is nothing more than the latest sign that the US is keeping a watchful eye on the cryptocurrency space.
Upon news of the CFTC probe breaking, Binance co-founder Changpeng Zhao was quick to defend his company by saying that they follow all relevant rules and regulations in the US. He went on to say that Binance will “continue to improve [our] compliance. We’ll also work very actively with regulators around the world to improve the compliance standards of the industry.”
Not the CFTC’s First Rodeo
While this probe very well might not lead to any charges, few would be surprised if it did. After all, it was not all that long ago when the CFTC sued crypto exchange BitMex for failing to register as an approved broker. What’s more, the largest crypto exchange in the United States, Coinbase, also recently announced that they too were responding to a “wide-ranging” probe by the CFTC. If the probe into Binance does result in a fine or other charges, it would be the most high-profile event to date.
It isn’t just the CFTC that is stepping in to begin policing crypto-related activities, because the US Treasury Department also announced that it is looking into the establishment of regulation that would require banks and other financial institutions to disclose the identities of people known to be invested in digital assets. While this is far from being enacted, it is another in the long line of signs that the US Government will soon be cracking down on crypto trading and will inevitably want what it believes is its “fair share”. How all this plays out is yet to be seen, but if history is an indicator of the future, you can bet that the United States government will find a way to regulate an industry that has thus far mostly avoided regulation.