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General question: are crypto exchanges not regulated the same way banks are regulated (in the US)?

by leifg 5y ago

smt88 5y ago
No. They fall under a variety of regulations because they sell securities, transmit money, and hold cash, but most of them are not banks yet. I think that will change soon, especially as the government equates stablecoin offerings as equivalent to banking. Also, Binance is not regulated in the US at all. It's banned from the US.
- kolanos 5y ago
  > Also, Binance is not regulated in the US at all. It's banned from the US. Their website suggest otherwise? > Binance is unable to provide services to U.S. users. Binance.US (BAM Trading Services) is a US-regulated cryptocurrency trading platform. In approved states, U.S. customers can use Binance.US to buy and sell over 50 cryptocurrencies with low fees. So it looks like Binance has a U.S. entity that is regulated.
  - Tenoke 5y ago
    Binance.us is so much more limited and separate from Binance.com that it's easier to think of it as a seperate entity that Binance lends their name to.
  - latchkey 5y ago
    Binance.com is banned in the US. If you are a US citizen (and KYC'd as such), you can't access their site services at all. Even if you do get in, you can't deposit / withdraw. As a US citizen, I tried to setup an account with Binance.US when it launched and for whatever reason, their automated systems locked me out and I didn't bother trying to investigate it further. So yea, despite what Reuters says, my personal experience is that their platform is pretty tough on compliance.
WJW 5y ago
Nope. They don't have a banking license so they are not banks so they are not regulated like banks. (Whether they should be regulated like banks is a different question, and one that is still being debated)
- kolanos 5y ago
  While they're not regulated like a bank, nor should they be, since they're not a bank... They are regulated, such as by FinCEN [0] which imposes AML and KYC measures on all fintech (including crypto) companies operating within the United states. Additionally, since crypto is classified as securities in the U.S., I believe they are regulated by the SEC as well. [0]: https://www.fincen.gov https://www.fincen.gov
  - miohtama 5y ago
    United States does not have regulation for cryptocurrencies. They also do not have classification for cryptocurrencies.
gruez 5y ago
Some of them are, eg. https://www.finextra.com/newsarticle/36582/crypto-exchange-kraken-gets-wyoming-bank-license https://www.finextra.com/newsarticle/36582/crypto-exchange-k...
- deleted 5y ago
  [deleted]
legutierr 5y ago
Crypto exchanges are typically regulated as money transmitters (like PayPal, for instance), usually by state banking regulators. In New York a special "bitlicense" is required, which is issued by NY state banking regulators. Among the differences between being a money transmitter and a being a bank include an obligation that 100% of client obligations be backed by cash-equivalent assets or surety bonds (as opposed to <20% fractional reserve required of banks). Money transmitters are not insured by the FDIC, so there is no federal-level prudential supervision. State regulation varies between completely hands-off (Montana, for instance, does not require licensing to operate in the state) and very strict (for instance in the case of New York). That being said, with regards to anti-money laundering, all money transmitters are overseen at the federal level by FinCEN, and are subject to the Bank Secrecy Act with regards to all KYC and anti-money laundering requirements. Regardless as to the states in which they operate, they must register with FinCEN, and like banks must take proactive steps to detect and report suspicious activity to that entity. In other words, there is no way for Binance to operate legally in the United States without being subject to the same strict anti-money-laundering rules and requirements that banks are subjected to.

General question: are crypto exchanges not regulated the same way banks are regulated (in the US)?

by leifg 5y ago

General question: are crypto exchanges not regulated the same way banks are regulated (in the US)?

No. They fall under a variety of regulations because they sell securities, transmit money, and hold cash, but most of them are not banks yet. I think that will change soon, especially as the government equates stablecoin offerings as equivalent to banking. Also, Binance is not regulated in the US at all. It's banned from the US.

kolanos 5y ago
> Also, Binance is not regulated in the US at all. It's banned from the US. Their website suggest otherwise? > Binance is unable to provide services to U.S. users. Binance.US (BAM Trading Services) is a US-regulated cryptocurrency trading platform. In approved states, U.S. customers can use Binance.US to buy and sell over 50 cryptocurrencies with low fees. So it looks like Binance has a U.S. entity that is regulated.
- Tenoke 5y ago
  Binance.us is so much more limited and separate from Binance.com that it's easier to think of it as a seperate entity that Binance lends their name to.
- latchkey 5y ago
  Binance.com is banned in the US. If you are a US citizen (and KYC'd as such), you can't access their site services at all. Even if you do get in, you can't deposit / withdraw. As a US citizen, I tried to setup an account with Binance.US when it launched and for whatever reason, their automated systems locked me out and I didn't bother trying to investigate it further. So yea, despite what Reuters says, my personal experience is that their platform is pretty tough on compliance.

WJW 5y ago

Nope. They don't have a banking license so they are not banks so they are not regulated like banks. (Whether they should be regulated like banks is a different question, and one that is still being debated)

kolanos 5y ago
While they're not regulated like a bank, nor should they be, since they're not a bank... They are regulated, such as by FinCEN [0] which imposes AML and KYC measures on all fintech (including crypto) companies operating within the United states. Additionally, since crypto is classified as securities in the U.S., I believe they are regulated by the SEC as well. [0]: https://www.fincen.gov https://www.fincen.gov
- miohtama 5y ago
  United States does not have regulation for cryptocurrencies. They also do not have classification for cryptocurrencies.

gruez 5y ago

Some of them are, eg. https://www.finextra.com/newsarticle/36582/crypto-exchange-kraken-gets-wyoming-bank-license https://www.finextra.com/newsarticle/36582/crypto-exchange-k...

deleted 5y ago
[deleted]

legutierr 5y ago

Crypto exchanges are typically regulated as money transmitters (like PayPal, for instance), usually by state banking regulators. In New York a special "bitlicense" is required, which is issued by NY state banking regulators. Among the differences between being a money transmitter and a being a bank include an obligation that 100% of client obligations be backed by cash-equivalent assets or surety bonds (as opposed to <20% fractional reserve required of banks). Money transmitters are not insured by the FDIC, so there is no federal-level prudential supervision. State regulation varies between completely hands-off (Montana, for instance, does not require licensing to operate in the state) and very strict (for instance in the case of New York). That being said, with regards to anti-money laundering, all money transmitters are overseen at the federal level by FinCEN, and are subject to the Bank Secrecy Act with regards to all KYC and anti-money laundering requirements. Regardless as to the states in which they operate, they must register with FinCEN, and like banks must take proactive steps to detect and report suspicious activity to that entity. In other words, there is no way for Binance to operate legally in the United States without being subject to the same strict anti-money-laundering rules and requirements that banks are subjected to.