Singapore: The news that Binance withdrew its application for a cryptocurrency exchange in Singapore on December 13 triggered a small wave that reduced the sensitivity of investors to the emerging global cryptocurrency market.
Cryptocurrencies extended the declines after the Binance move. Bitcoin, the world's largest digital currency, fell 3% to $48,484, while ether, the second largest cryptocurrency, fell 4.1%.
The decision comes at a critical moment, as Binance announced its decision to establish a global headquarters soon.
Binance's decision has reduced speculation that Singapore, one of the world's largest cryptocurrency exchanges, is up and running.
Binance will not leave Singapore
However, it is too early to conclude that the withdrawal of Binance is a setback. The closure of the cryptocurrency trading platform in Singapore does not mean that the company will completely lose its activities in Singapore.
On the contrary, Binance has taken steps to contact the financial center.
Binance recently invested in the Singapore private stock exchange, where it bought an 18% stake in the company just two weeks ago.
HGC has a recognized market operator license. Currently, these are shares of private companies, as well as symbolic securities, which include rare whiskey, art and real estate.
Thanks to this investment, Binance is able to expand its crypto business in Singapore.
Binance also plans to establish a Blockchain Innovation Center in Singapore that will study initiatives such as blockchain incubation and education programs and other investment opportunities.
Binance is undoubtedly under regulatory pressure
With Binance's growing global influence, regulators around the world are concerned that cryptocurrency exchanges could be used for money laundering purposes or that investors could become victims of fraud and uncontrollable gambling.
Due to its opaque corporate structure, lack of financial information and the design of complex and risky financial products, Binance "will not be able to audit effectively."
The authorities of Japan, Great Britain, Germany, Italy, Hong Kong, Malaysia, Lithuania and Thailand are paying more attention to the company.
Some have excluded the platform from certain activities, while others have warned consumers that they will not be able to take regulatory measures if the stores turn south.
Although Singapore is considered a friendly destination for Binance to create a new cryptocurrency exchange, Singaporean regulators have largely backed down due to concerns about the weakness of consumer protection mechanisms.
Although Binance claims to have made improvements, it has not complied with the requirements of the Monetary Authority of Singapore for protection against money laundering and terrorist financing.
Among the few regulatory problems, one of the main ones that prevents Binance from qualifying is the secrecy of its global headquarters, which has tax and regulatory implications. December.
Did he pull the trigger too soon?
The withdrawal came in September, when MAS Binance ordered Singapore to stop all cryptocurrency transfers with the global exchange binance.com that the regulator has included in the investor alert list.
In response to regulatory pressure, Binance tried to improve compliance references on its website at the end of November by publishing an article entitled 10 "fundamental rights" of cryptocurrency holders, highlighting its "responsibility" to work with regulators and decision-makers and calling for greater clarity on the global regulatory framework.
So, what is really behind Binance's withdrawal from the crypto exchange in Singapore?
The company said it had taken into account "strategic, commercial and development policy" considerations in its final decision. You may have decided to change gears so as not to create one because you are participating in a locally organized exchange.
However, I will not read much about these developments. This is another chapter in Binance's long-running dispute with regulators around the world, as the company adapts to regulatory pressures.
More implications for cryptocurrency exchanges and the blockchain industry
However, the withdrawal of Binance may be a sign that the wheels are turning against the cryptocurrency, as regulators oppose this "wild west".
The use of blockchain technology and the Binance cryptocurrency, which is one of the first platforms to have looked at the largely unregulated spot trading and crypto derivatives environment in recent years, has seen a rapid growth in loans, non-tradable currencies and token users (NFTs) offering a wide range of services, such as Bitcoin, Ethereum, Litecoin, Ethereum, Litecoin.,
The laxity of the global regulatory landscape has allowed these companies to succeed. Binance has built a huge fan base all over the world with channels on Telegram, a cross-platform instant messaging application for users from more than 30 countries.
Most countries, if they want to put their finger on this growing technological pie, will intervene aggressively. On LinkedIn, Binance currently lists more than 1,000 vacancies from the British and Dutch economies in Hong Kong, Taiwan and Singapore.
However, many industry experts agree that the largely unregulated development of the cryptocurrency industry in general and Binance in particular will soon be a thing of the past.
We can assume that the main cryptocurrency market around the world, including the United States, the United Kingdom and many Asian countries, will impose more restrictions on the cryptocurrency industry in the near future.
Financial regulators, the dizzying growth of digital assets and the risks that can spread to the real economy are increasingly concerned about what should be considered systemically important to reduce speculation and risk.
Given the anonymity, decentralization and rapid development, regulators should now consider this new blockchain and crypto technology more broadly and work closely with market participants to create a healthy regulatory environment.
As Binance CEO Changping Zhao once said, the key to its growth is to gain the trust of users. Zhao also noted that despite the rapid development of digital capital, more than 2% of the world's population does not use cryptocurrency.
To attract these 98% of people, we need regulation. he said.
Chen Tao is an associate professor of finance at Nanyang Business School of Nanyang Technological University.