Crypto exchanges are typically regulated as money transmitters (like PayPal, for instance), usually by state banking regulators. In New York a special "bitlice

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.