Binance, the world’s largest cryptocurrency exchange, is undergoing a significant shift towards regulatory compliance. This comes after facing scrutiny from global regulators, including a recent $4.3 billion settlement with US authorities for money laundering violations.
Focus On Compliance Staffing And Spending
In a recent interview with Bloomberg, Binance CEO Richard Teng outlined the company’s commitment to compliance. This commitment is reflected in a major hiring initiative, with plans to add 1,000 new employees this year, with a significant portion dedicated to compliance roles. This ramp-up in compliance staffing is accompanied by a substantial financial investment. Binance’s annual compliance spending has already surpassed $200 million, a significant increase from $158 million just two years ago.
Increased Costs from Regulatory Monitoring
Adding to the compliance expenses are ongoing monitoring fees from US agencies like the Department of Justice (DOJ) and the Financial Crimes Enforcement Network (FinCEN). This heightened scrutiny stems from the aforementioned settlement, which included independent compliance monitoring by Forensic Risk Alliance and Sullivan & Cromwell.
Binance’s compliance spending is projected to climb even higher in the future. Notably, these costs are expected to exceed the net costs incurred by Ripple Labs in their ongoing lawsuit with the SEC. While Ripple CEO Brad Garlinghouse reported spending $200 million on legal defense, Binance’s compliance focus goes beyond litigation costs.
Crypto Industry Faces Compliance Hurdles
This renewed focus on compliance by Binance reflects a wider trend within the crypto industry. Crypto companies are collectively spending billions on compliance efforts or settling with regulators. This trend highlights the lack of clear regulatory frameworks surrounding cryptocurrency, which has become a major hurdle for broader industry adoption.
Also Read: Binance & CZ Face New Lawsuit Over Alleged Money Laundering, Raising Questions About Crypto Tracing
Despite the compliance challenges, the recent hiring spree at Binance could also be interpreted as a sign of bullish sentiment within the company. Following Changpeng “CZ” Zhao’s departure from the CEO position, Richard Teng has implemented several changes, including working with prime brokers, tightening listing requirements for new cryptocurrencies, and spinning off the venture capital arm, Binance Labs. These moves, coupled with the significant investment in compliance, suggest a strategic shift towards a more sustainable and regulated future for Binance.
While Binance prioritizes compliance, the legal battle with the SEC continues. A recent court decision allowed most arguments against the exchange and its co-founder CZ to proceed. Additionally, other crypto companies like Tether are mirroring Binance’s hiring strategy, potentially signaling a broader industry recovery.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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