Following increased regulatory action from the SEC and other local and global watchdogs, members of the crypto community are concerned about the industry’s future relationship with the banking sector.
Pivot to Europe in The Cards
The frenzy surrounding future crypto regulation has been amplified following the collapse of Signature Bank and Silvergate Bank, both of which provided much of the infrastructure needed to keep the crypto world tied to the banking sector.
To make matters worse, the SEC’s refusal to respond to requests for information from Coinbase and other crypto platforms signals a willingness to cooperate that clear regulatory agreements with those US institutions made in good faith can be a way to.
Some companies – such as Gemini, which recently announced the establishment of an EU HQ in Ireland – have decided to look to Europe instead.
Binance thinks outside the Box
Binance does not operate within the United States. To provide service to US customers, Binance.US was launched. Although the two platforms share the same name, Binance.US has a different organizational structure and does not report to CZ or other members of the global company’s C-suite.
For several months, Binance has been looking for solutions to the bad relationship that currently has crypto in the banking sector, especially following recent disputes with Australian banks and fiat providers.
We regret to inform you that with immediate effect we will not be able to facilitate PayID AUD deposits for Binance users due to a decision made by our third party payment service provider. We understand from our third party payment service provider that the Bank…
– Binance Australia (@Binance_AUS) May 18, 2023
In an interview taken by the Bankless podcast, CZ stated that he and his team for a while floated the idea of just buying a bank directly to solve these types of issues without relying on others. However, in the end they decided against it.
According to the exec, the problems faced by cryptocurrency platforms cannot be solved simply by buying a bank. Even if a bank is bought in the US, it does not guarantee regulatory approval in other territories.
Additionally, the costs associated with buying and operating a bank may prove to be worthless as regulators may simply prohibit the bank from dealing with crypto anyway.
“Banks are not cheap. Banks are too expensive for too little business income. […] The amount of capital required is very high, and the regulatory approval to buy a bank is the same or more than the establishment of a new bank, which is very heavy. If the bank regulators say, ‘ Look, you can’t work in crypto’ then they’ll take your license if you do. So buying a bank doesn’t prevent regulators from telling you, “No, you can’t touch crypto.” However, we need corresponding banks around the world. “
However, CZ stated that he and his company are still considering making smaller investments in the banking sector, although buying a banking institution is completely off the table.
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