Binance Cedes to Increasing Regulatory Pressure

Binance tokenized stocks lose. Government barriers to entry win again.

Binance Slapped Down!

Binance has announced that it’s shutting down tokenized stocks on the exchange, stopping new purchases effective immediately. This comes just three months after launching the product, which had allowed customers to buy fractions of shares in companies like Tesla, Coinbase, MicroStrategy, Microsoft and Apple. Users have until October 14th to move their tokens off-platform.

Binance said “the decision was made so that [we] can focus on other products”, but it seems that the real reason has more to do with the barrage of regulatory hurdles governments around the world are throwing in their way. Hong Kong is the latest jurisdiction to warn the exchange about its operations, prior to that Germany expressed concerns, Thailand filed a criminal complaint, Binance had to shutter its doors in Canada, and the UK and Japan both issued warnings that Binance was not licensed to be offering regulated services in their markets. 

When the U.K. banned Binance's affiliate, Binance Markets Limited, many financial institutions including Barclays ended their relationship with Binance.com. Binance hit back, emphasizing that these partners misunderstood the situation and that Binance.com shouldn’t be affected by the ban.

“BML is a separate legal entity and does not offer any products or services via the Binance.com website.”

But perhaps both the FCA and these financial institutions completely understood the situation, and realized that they can use their leverage to force Binance compliance on all products, or be barred from the country entirely, regardless of whether they’re technically violating any laws. 

Binance has systematically been breaking down the barriers to entry for financial tools that have historically only been available to certain types of people. It seems governments are keen to put those barriers right back up. Offering tokenized stocks pushed one button too many.

If nothing else, this development signals how much the world needs more decentralized platforms that cannot be shut down. 

It's Sam Bankman-Fried's World

CEO and founder of the FTX crypto exchange, Sam Bankman-Fried, said in an interview with the Financial Times that once FTX becomes one of the largest exchanges, buying huge wall street giants like Goldman Sachs or CME is “not out of the question at all”.  Bankman-Fried, an MIT grad and former Wall Street ETF trader, launched FTX in 2019 and the vast majority of his wealth has been made in FTX's equity and tokens (FTT).  This interview is coming fresh off the heels of FTX’s latest announcement that they have joined Copper.co’s ClearLoop settlement trading network, which will allow Copper’s client base of more than 300 institutional asset managers to now trade FTX’s products -- which include options, derivatives, and tokenized stocks -- with their funds secured within Copper’s platform.

Fed Chair, Powell, on Making Crypto Obsolete

Federal Reserve Chairman, Jerome Powell, made an appearance before the House Financial Services Committee Wednesday where he faced questions on a slew of topics, including his thoughts on regulations around cryptocurrencies and central bank digital currencies (CBDCs).  He argued that, “...a strong argument in favor of a US digital dollar is the CBDC’s ability to undermine cryptocurrencies and stablecoins“.  When asked about the United States’ progress on the matter (or lack thereof), he responded by saying, “...while the US does not have to be the first country to develop a CBDC, it has an obligation to be the best”.  In an announcement made Friday by the US Treasury Department, President Biden’s Working Group on Financial Markets released plans to discuss stablecoins at a meeting on Monday July 19.

Spike Lee Goes Crypto

In a recent commercial for crypto ATM company Coin Cloud, Academy Award Winner and Civil Rights Advocate Spike Lee, just threw his hat into the ring recognizing crypto as “the digital rebellion” against a financial system that has historically oppressed people of color and women. This revelation arrives in perfect juxtaposition just after Dogecoin co-creator Jackson Palmer’s recent tweet that he has no interest in participating in crypto, stating the technology is inherently “hyper-capitalistic technology”. Why not both?

Vitalik Buterin Involved in New Ethereum Documentary

A feature-length documentary about Ethereum will feature Ethereum Co-Creator Vitalik Buterin, along with many more interviews with the people involved in the development of the world computer.  “Ethereum: The Infinite Garden” is being produced by film production company Optimist, with Carrie Weprin producing and Zach Ingrasci and Chris Temple co-directing.  No release date has been set yet.

Two SEC Commissioners Break with SEC Over Crypto Regs

When two SEC commissioners, Elad Roisman and Hester Peirce, issued a statement about the recent Coinschedule ruling, CEO of Electric Coin Company, Zooko Wilcox, responded:

“Is it normal for two sitting SEC Commissioners to publicly castigate their own agency for its failure to provide good public policy? Honest question.”

While Peirce and Roisman agreed that Coinschedule was violating federal law by not clearly defining which of their assets were securities, they objected that the settlement did not offer any regulatory clarity for other market participants.  

“We nevertheless are disappointed that the commission’s settlement with Coinschedule did not explain which digital assets touted by Coinschedule were securities, an omission of which is symptomatic of our reluctance to provide additional guidance about how to determine whether a token is being sold as part of a securities offering or which tokens are securities.”

The charges against Coinschedule, which have now been settled, are among a series of charges recently brought by the SEC against operators of ICOs, who still remain at a loss for how exactly to operate legally due to this vacuum of clear guidance.

ShapeShift Sheds Corporate Structure for a DAO

Shapeshift Founder, Erik Voorhees, announced on CoinDesk TV Thursday that, "Run-ins with regulators was one of the motivations behind ShapeShift’s plan to shut down and convert into a decentralized autonomous organization (DAO)”.  Voorhees went on to provide details on what will happen to the company, including its employees.  “Regulatory friction absolutely has a part in this decision,” said Voorhees, who started the exchange in 2014.

Shapeshift continues to lead by example in the space, embracing decentralization in full rather than just dreaming about it. We applaud their shift and wish them the best of luck.

By Will Sandoval NBTV Associate Producer, and Naomi Brockwell

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