Binance may have a way out of US regulatory trouble. Cryptos are piling up.
The world’s largest cryptocurrency exchange may have a way out of existing US legal troubles, which would be good news for Binance as regulatory storm clouds gather around the industry. That may be a factor behind the recent rally in digital assets.
Binance expects to pay a fine to settle existing regulatory and law enforcement investigations into its business, The Wall Street Journal reported on Wednesday, citing an interview with the group’s chief strategy officer Patrick Hillmann. The crypto chief said Binance is working with regulators regarding possible remedies, but expects the outcome will likely be a fine — though it could be more, the report said.
Binance is likely under pressure on several fronts, and the Journal cites people familiar with the matter as reporting that the Justice Department is investigating the group over potential violations of an anti-money laundering law. The Commodity Futures Trading Commission (CFTC) has also investigated the exchange over potentially improperly offering crypto derivatives to US investors, the report said.
Binance, which did not immediately respond to a request for comment from Barron’sis not alone in feeling the pinch.
Regulators and lawmakers have stepped up their scrutiny of digital asset companies over the past year, with falling crypto prices, alleged market fraud and a series of bankruptcies putting the nascent industry under the spotlight. This pressure looks set to only increase in the wake of crypto exchange FTX’s spectacular collapse in November, with the Securities and Exchange Commission projecting a distinctly more aggressive tone in several actions in recent weeks.
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If Binance can emerge from today’s scrutiny with just a fine, it will be a welcome sigh of relief for one of the industry’s most influential players. By far the world’s largest crypto trading site, a body blow to Binance would be a body blow to Bitcoin.
Optimism about the prospect of a fine may be a factor driving a rally in cryptos over the past 24 hours. Digital asset prices have been weighed down in the past week, with a flood of concerns about US regulatory storm clouds stalling the momentum behind a rally that had driven Bitcoin higher at the start of the year.
But
Bitcoin
and peers have marched higher and higher over the past day – compensating for their correlation to the stock market, while
Dow Jones Industrial Average
and
S&P 500
have largely failed — with few obvious catalysts. Binance could be one.
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Write to Jack Denton at [email protected]
