At the core of cryptocurrencies is decentralization, eliminating intermediaries and empowering users to manage their own money. With decentralization being the very goal of digital assets, it is no wonder that regulation seems to have no place in this sector. While this opinion is popular among cryptocurrency users, history has proven this viewpoint to be shortsighted.
Purchasing from a lesser understood asset class that exists in the “Wild West” does little for investor confidence. Subsequently, as cryptocurrency assets continue to grow in value, the media has been quick to point out the number of scams, insider trading and market manipulation, including but not limited to pump and dump schemes.
These risks are in addition to the less obvious, including the trustworthiness of an online exchange or the potential for interest-earning platforms going bankrupt. These concerns may be addressed with regulation, and even the most skeptical of investors may be willing to take the plunge into cryptocurrencies.
Presently, industry leaders like Binance, one of the largest cryptocurrency exchanges in the world, have made it their aim to address growing concerns around regulation. Speaking about the importance of regulation, the CEO of Binance, better known as CZ, urges users to compare cryptocurrency regulations to that of a car.
He argues,
“When the car was first invented, there weren’t any traffic laws, traffic lights, or even safety belts. Laws and guidelines were developed along the way as the cars were running on the road.”
Recognizing the value of regulation, it is no surprise that Binance has made it a part of its commitment to ensuring the safety of users when navigating the crypto sphere. By practicing what they preach, the exchange remains in alignment with all regulatory requirements, even before regulators enforce these measures.
Keeping funds SAFU
One of these initiatives has been Binance being among the first cryptocurrency exchanges to maintain a secure asset emergency fund (SAFU). The fund, valued at USD 1 billion at the end of January 2022, is made up of a percentage of all trading fees that occur on the platform, providing a measure of safety to all platform users.
Other notable efforts include the partnership with several law enforcement agencies that identify bad actors and hold them responsible for their actions. As far as partnerships go, the exchange has looked to firms such as CipherTrance, a platform known for automating cryptocurrency Anti-Money Laundering (AML) compliance through API usage, as a part of their growing efforts. AML audits are also conducted by the team, with a number already cleared.
Their commitment does not stop with these regulations, as Binance has recently expanded their compliance team. With a 500 percent increase from the previous year, many former FATF executives have joined the ranks to ensure the team complies with all local rules applicable to where they are operating.
Where compliance pays off
Leading by example has proven beneficial for Binance, who have since shared some promising updates with their community in response to their efforts. On Dec. 21, 2021, the Binance team shared their signing of an MoU, or Memorandum of Understanding, with the Dubai World Trade Centre Authority (DWTCA), defining the creation of an industry hub for Global Virtual Assets. By signing this MoU, Dubai, with Binance’s help, showcases its commitment to long-term economic growth attributed to digital innovation.
On Dec. 27, 2021, the Binance team shared additional news announcing the receipt of in-principle approval from the Central Bank of Bahrain (CBB), effectively making the Binance exchange the first regulator in the MENA region.
Together these announcements signify the much loftier mission of increasing cryptocurrency adoption as a whole. While analysts estimate that the world is still in the early adopter phase, with the remaining 95% of people seeking out a regulated, licensed exchange with a local presence, it seems that Binance’s efforts are a clear step in the right direction.
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