Binance standoff shows Bitcoin’s limitations


If you can’t spend the spoils, what’s the point of using Bitcoin to kill?

customer of BinanceIt is one of the largest cryptocurrency exchanges in the world, and they are facing this problem after their account was suddenly disconnected from one of the main UK payment systems.

A few days after the Financial Conduct Authority ordered Binance Stop all regulated activities In the UK, digital asset companies Stop Allow its customers to withdraw pounds sterling through Faster Payments, a service used by High Street Bank. Bank card transfers in pounds sterling have also been suspended.

Binance insists that the FCA ban will not affect its business and said it is restoring links. Customers can still transfer their assets to other platforms. But the sudden stop highlights a key issue in the free world of cryptocurrencies.With obvious exceptions Savior, No country uses Bitcoin as legal tender-even Elon Musk has Support closed It is planned to accept it as a payment from Tesla. On the contrary, cryptocurrency holders must find a way to convert it into legal tender.

This is where the problem lies. Regulators that have been fighting money laundering and terrorist financing for decades will not welcome large amounts of anonymous funds from unsupervised digital currency exchanges.The anonymity of Bitcoin and some of its competitors is clearly welcomed by people Cybercriminals with Tax evader.

Facebook felt the potential backlash early when it announced its plans in 2019 Revolutionize global payments Digital currency Libra system. The project has encountered regulatory buzz and has been repeatedly postponed, Withdraw with Even changed its name to Diem.

Since then, the government has become more and more interested in cryptocurrencies, and their methods have become more complex. Most large central banks are at least considering whether to issue their own digital currencies, and banks and securities regulators are beginning to incorporate encryption platforms into their regulatory networks.

Binance’s dilemma stems directly from the UK’s 2020 initiative to require crypto asset companies Register with FCA And prove compliance with anti-money laundering rules.The regulator stated that 90% of potential registrants are “unprecedented”, including Binance’s UK branch, Has abandoned their application instead of meeting FCA standards.

In Canada, the Ontario Securities Commission has started Take legal action Oppose unregistered cryptocurrency exchanges, prompting Binance to withdraw. German with U.S. regulatory agency They are also concerned about cryptocurrency platforms.

Cryptocurrency optimists continue to view every regulatory crackdown as a positive sign of the maturity of the medium. They make sense.Banking regulators will not allocate High risk weight If some lenders do not start holding digital currencies, the Financial Services Agency of Japan will not issue a second one Warn against illegal operations within three years If Binance does not continue to attract customers.

But this optimistic outlook is limited. China’s repression The power-consuming process of Bitcoin production greatly reduces the price of the most famous cryptocurrency. Censorship elsewhere has forced cryptocurrency providers to reconsider their business models.

So far, Binance and other crypto platforms have been able to operate with fewer employees and fewer customer checks than their counterparts in the traditional financial sector. The window of leniency will almost certainly close, forcing the industry to make difficult choices.

Too much censorship will drive away early adopters who are free to drive its rapid growth. However, without proper systems and controls, the broad appeal of cryptocurrencies will be limited. Coinbase, one of the largest platforms in the world, is a good example.Its direct listing on Nasdaq in April is considered verification For the industry, the stock price has fallen by more than 20% from its first-day closing price. Investors worry that falling Bitcoin prices will weaken trading volumes, and increased competition and costs will reduce profit margins.

Look at how many regulated banks, brokers and exchanges have smelled the opportunity.On Tuesday alone, Deutsche Börse stated that it had Purchased a Swiss cryptocurrency provider, Fidelity, Standard Chartered Bank and TP ICAP announced that they have Jointly launched An encrypted trading platform.

Cryptocurrency fanatics may applaud Binance’s anti-authoritarian attitude. Most investors want a platform where they can easily withdraw funds.

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