Daily Crypto, Finance, and Tech News Summary – December 12, 2023

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Welcome, and thank you for being part of the MyZucoins community! Let’s get into an interesting piece of crypto, finance, or tech news to stay ahead.

Lots of regulator people going around an inspecting paperwork for everyone at a cryptocurrency wall st exchange

Binance Exchange Crackdown Will Create Enormous Crypto Surveillance

Since its founding in 2017, Binance, the world’s largest cryptocurrency exchange, has grown to over 100 million crypto-trading users worldwide.

However, the company has paid the price for its disregard of U.S. financial regulations and money-laundering laws.

Last month, the U.S. Justice Department handed down one of the most punitive money-laundering criminal settlements in its history, forcing Binance to change its practices and open its past books to regulators.

As part of the settlement, Binance has agreed to a strict regime of data-sharing.

The company will provide U.S. regulators and law enforcement with more than half a decade of users’ transaction records.

This unprecedented level of oversight will transform Binance from a haven for crypto commerce into perhaps the most regulated business in the industry.

Binance’s settlement includes a record-breaking $4.3 billion fine and the stepping down of founder Changpeng Zhao from his CEO role.

The company will also actively scrutinize its transactions from 2018 to 2022 for potential violations of U.S. law, an action known as a “SAR lookback.”

The U.S. government, not Binance, will select an in-house watchdog to ensure the company complies in good faith.

Binance’s radical transparency might please law enforcement and regulators, but its users and financial privacy advocates are less enthusiastic.

Some argue that the U.S. government’s actions set a precedent for the crypto industry and infringe on financial privacy.

Despite these concerns, Binance’s chief compliance officer, Noah Perlman, sees the new era as an opportunity for the company to set industry compliance standards.

Binance’s consent to U.S. regulator scrutiny marks a significant shift for a company that resisted regulation for years.

Former SEC attorney John Reed Stark suggests that the company may struggle to adhere to the settlement terms.

However, with hefty fines, criminal sentences, and harsher consequences if the settlement fails, Binance and its users may have no choice but to comply. Read more here.

More On This Topic:

Is Zucoin’s Zutopia marketplace a crypto exchange? How does it avoid these issues?

Honest state of the traditional crypto industry.

Cryptocurrency exchanges remove 3,400+ tokens in record delisting spree.

Australia prepares to regulate digital asset platforms, incl exchanges, not tokens.

Binance exchange’s UK setback.

Why Does Compliance Matter In Crypto? Does Zucoin Comply With Regulators?

When the powerful shake, the ripples are felt far and wide.

The U.S. and many other nations have been making ground-shaking examples out of many cryptocurrency exchanges over the past year.

The unfolding saga of Binance, the world’s largest cryptocurrency exchange, and its collision with US regulators, provides a stark reminder of the critical importance of compliance in the cryptocurrency world.

Compliance in crypto aims to keep the industry sustainable long-term and legitimate.

This unexpected shift offers an important lesson for emerging products and services in the crypto industry.

Zucoin, which operates on the Splitchain network, prioritizes safe and dependable transfers amongst peers themselves, which, due to the different nature of the service provided, involve different sets of regulations to what an exchange like Binance has to comply with.

Transactions on Splitchain require cryptographic approval from both peers in their two-factor authentication (2FA) safety feature, which could decrease the chance of illegal transactions and possibly money laundering, by placing more of the responsibility on the peers transacting amongst themselves.

Zutopia has also been carefully designed to be a peer-to-peer marketplace, not an exchange.

More like Ebay, not Binance.

It’s factors like these that Australian regulators, such as Austrac, consider.

Zucoin has completed audits with not only Austrac, but also a thorough investigation with ASIC—two prominent Australian regulators.

Doing so has made Zucoin one of the first, if not the first cryptocurrency, to do so in a developed nation such as Australia.

Many regulators, as expected for a long while, will use the conversion process of a digital asset into a local country’s currency, known as fiat currency, as the opportunity to check for Know-Your-Customer (KYC) compliance.

After the US government gets the data from Binance, other nations will likely also request the data.

From there, each country’s tax collectors will certainly look for a lot of people who haven’t reported cryptocurrency sales in recent years, for example, under capital gains or losses.

This has been a requirement for at least a few years in many established countries around the world and may catch many people out.

The upside to all this is, that it’s further proof the US government and many others are taking crypto very seriously.

Governments consider cryptocurrencies real assets.

The crypto exchange cleanup adds more indication of a potential Bitcoin ETF coming soon.

It’s also worth remembering that wallet addresses in crypto systems tend to be pseudonymous.

This means they are essentially private and unknown much of the time, until you tell people your wallet address.

Out of the box, public ledgers like blockchain or SplitChain don’t know who owns a wallet address.

As you share your wallet address with people and at points of purchase, such as exchanges or merchants, this is where much of the personally identifiable data is collected, as required by regulators for KYC compliance rules.

These rules don’t just affect crypto.

Any sort of middleman handling things where money trades hands usually has to comply.

For example, even places like eBay, Amazon and others.

This kind of data traceability already happens anytime you use your Visa or Mastercard.

Zucoin is continually focused on the latest regulator developments and frameworks, usually well ahead of time, to reduce the sudden impact of such changes.

This proactive approach is not merely about minimizing potential errors and missteps, but is a conscious effort to establish trust with users, institutions, industries and authorities alike.

Creating a crypto system is more than just building a Bitcoin alternative.

As regular readers of this newsletter will know, it involves many, many decisions that go far beyond just a nice-looking wallet app.

It’s a delicate line to balance and the Zucoin team will keep on it.

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All the best,

Disclaimer: Of course, this is not advice, financial or otherwise. It’s also important to consider the risks and challenges associated with any potential benefits.