In the face of escalating regulatory scrutiny, Binance.US, the American offshoot of the global cryptocurrency exchange giant, Binance, has announced its suspension of U.S. dollar deposits. The company’s banking partners are also preparing to cease fiat dollar withdrawal channels as early as June 13. The development comes just days after U.S. regulators, including the Securities and Exchange Commission (SEC), filed lawsuits against both Binance and its CEO, Changpeng Zhao.
The decision signifies a significant shift for the crypto exchange as it proactively transitions to a crypto-only platform temporarily. This move, the company maintains, is designed to ensure that all other trading, staking, deposits, and withdrawals in cryptocurrency remain fully operational.
However, the shift was not born out of the blue. This year has seen an escalated crackdown on the crypto industry by U.S. regulatory bodies, most notably the SEC. In addition to Binance, the SEC has also filed a lawsuit against Coinbase, the largest U.S. cryptocurrency platform, marking a milestone in the ongoing regulatory battle against the burgeoning industry.
These lawsuits follow in the wake of the 2022 implosion of FTX, another prominent player in the crypto arena, stirring concerns and re-igniting debates about the industry’s need for regulation. It’s worth noting that earlier on June 8, U.S. financial regulators expressed their support for a freeze on Binance’s assets, as recorded in an SEC filing to a federal court.
The chain of events leading to Binance.US’s decision has raised concerns among industry insiders. Matthew Dibb, COO of the Singapore crypto platform Stack Funds, acknowledged that the pause on withdrawals could create or spur a sense of panic. He also noted that the intense scrutiny and subsequent comments from the SEC and regulators were not unexpected.
While the news caused ripples in the industry, the larger cryptocurrency market remained surprisingly stable. Bitcoin experienced a marginal dip, while Binance’s BNB token slid a modest 0.46% to $261.46.
Nevertheless, this may be a calm before the storm. As IG Markets analyst Tony Sycamore suggests, the market’s reaction has been “extremely muted so far,” with the industry potentially yet to grasp the full ramifications of these developments.
In its communication, Binance.US took a firm stance against the SEC’s actions, describing the regulatory body’s approach to cryptocurrency as “extremely aggressive and intimidating.” It vowed to continue defending its customers, industry, and itself against what it terms the “meritless attacks of the SEC.”
This episode has also ignited a backlash against Gary Gensler, the chair of the U.S. SEC. However, he has brushed off criticism that his agency is attempting to quash the crypto industry. Instead, he argues that as regulatory scrutiny continues, exchanges and industry players will specialize in different roles to enhance user experience.
This article is based on the news reported on The Star’s website.