Binance enforces prime brokers to intensify data gathering, U.S. investors cleverly evade regulations.
Binance, the popular cryptocurrency exchange, has implemented stricter measures for screening its prime brokers, including Hidden Road and FalconX, in order to prevent U.S. investors from accessing its trading platform. These enhanced screening procedures are specifically designed for prime brokers that primarily serve institutional investors.
Under the new requirements, these brokers must collect comprehensive client data, including information about the geographical locations of their clients’ offices, as well as specific details about the founders and staff. Clients are also required to verify the accuracy of this information, ensuring the reliability and integrity of the data.
“Binance is fully committed to compliance and has publicly disclosed its assessment process for end users who can access the Binance platform. By providing transparency in its standards, Binance offers clarity to businesses that wish to access its market-leading liquidity,” a representative from Binance stated.
The representative also emphasized the “Binance Link Program,” an initiative aimed at improving trading and connectivity services for various businesses, including brokers, exchanges, and automated trading platforms. While the primary goal of the Binance Link Program is to expand trading and connectivity options, its underlying architecture can assist brokerages in meeting the exchange’s more stringent screening requirements.
These actions come in the wake of Bank Secrecy Act violations admitted by Binance and its former CEO, Changpeng Zhao. As a result, Binance was fined a substantial $4.3 billion by the U.S. Department of Justice for alleged involvement in money laundering, fraud, and sanctions violations. Zhao was criticized by the Department of Justice for specifically targeting American clients while evading U.S. regulations.
Furthermore, Binance has recently updated its token listing guidelines, implementing a longer “cliff period” for new tokens and requiring security deposits and token reserves for market makers. These measures aim to stabilize the market for newly launched tokens by extending the initial six-month threshold to at least one year.
In addition to these developments, Binance Labs, the venture capital arm of Binance, has established itself as a separate entity from the Binance group. This separation was quietly announced on the Binance Labs website and later reported by Bloomberg on March 15. According to Investment Director Alex Odagiu, Binance Labs will continue its operations under the Binance brand through a licensing agreement.
Overall, Binance is taking significant steps to strengthen its compliance measures and enhance its services for clients, while also addressing regulatory concerns and ensuring a more stable market for cryptocurrencies.
