Tag: scrutiny

Binance Stops Trading Of Stock Tokens amid increasing Global Regulatory Scrutiny

Binance announced the completion of the 16th quarterly Binance coin (BNB) elimination on Monday, 1,296,728 BNB (estimated $393.6million) has been burned. 

“The latest quarterly burn includes the actual burning of 1,291,565 BNB, plus an additional 5,163 BNB that was effectively burned via the Pioneer Burn Program,” according to the statement. As per the white paper, the remaining locked team BNB are now unlocked and have been moved to the team address.

This burning operation just comes after the suspension announcement last Friday, July 16, that Binance will no longer offer digital tokens linked to shares as the Hong Kong Securities and Futures Commission (SFC) imposed a crackdown on Binance, banning its sales of stock token offerings in the city.

Stock tokens, commonly recognised as tokenised stocks, are blockchain-based shares of publicly traded companies. Unlike traditional shares, stock tokens can be purchased in fractions – a feature particularly useful for expensive stocks.

Binance started trading its stock tokens in April this year and allowed users to purchase a fraction of publicly-traded companies’ shares without paying commission fees. The exchange has offered five stock tokens such as  MicroStrategy, Tesla, Microsoft, Coinbase, and Apple.  

The shutdown announced last Friday disallowing Binance trading of its stock tokens, and users of the exchange will no longer be able to purchase stock tokens, effective immediately. The company said the existing stockholders should sell their holdings before October 14. If they do not sell by such data, their stock token positions will be closed on October 15.

Binance’s announcement came a few hours before the Hong Kong Securities and Futures Commission issued a warning on Friday, saying that Binance is not licensed to carry out a regulated activity in the city, particularly offering stock tokens.

“In Hong Kong, Stock Tokens are likely to be ‘securities’ under the Securities and Futures Ordinance (SFO), and if so, they are subject to the regulatory remit of the SFC,” the regulator stated.

“The SFC warns that where the Stock Tokens are ‘securities,’ marketing and or distributing such tokens – whether in Hong Kong or targeting Hong Kong investors – constitute a ‘regulated activity’ and require a license from the SFC unless an applicable exemption applies,” the regulator further said.

Binance had been offering stock tokens through a partnership with CM-Equity AG, German Financial services firm. Shares held by CM-Equity AG fully backs each token.

The exchange revealed on Friday that CM-Equity AG is developing its stock tokens trading portal for residents of Switzerland and the EEA (European Economic Area) and that Binance users in such regions could use the portal once launched.

A Binance spokesperson did not comment on the move initiated by the SFC, which came a day after Italy’s financial regulator made a similar announcement. 

However, the spokesperson said that Binance does not currently have crypto business operations in Hong Kong and stated that the exchange takes its legal obligations seriously.

It is not clear whether regulators worldwide have coordinated their efforts, which have built unprecedented pressure on the largest cryptocurrency exchange in the world.

What’s wrong with Binance?

Apart from Hong Kong’s warning, Italy’s security regulator also announced that Binance was not authorised to offer investment services to Italians last Thursday, July 15. 

Global regulators have issued warnings against Binance, drawing attention to the exchange’s business operations and its survival in the future, including Thailand, Singapore, Canada, The Cayman Islands, and Japan have also issued similar warnings about the crypto exchange.

In April, Germany’s Federal Financial Supervisory Authority (BaFin) said that Binance might be in breach of the nation’s securities laws regarding its stock token offerings. Last month, The U.K.’s Financial Conduct Authority ordered Binance not to carry out any regulated activity in the nation. 

In short, regulators in multiple nations have announced that they are holding investigations against Binance or the crypto exchange is not authorised to operate within their borders.

Besides that, more nations have warned users about Binance. Many payment processors or banks, majorly in the UK and Europe, have subsequently cut off the crypto exchange.

Like any other centralised crypto platform, what is happening to the Binance crypto exchange may signal how regulatory authorities will approach cryptocurrency operations. The enforcement actions against Binance hint at what other crypto platforms are likely to expect.

White House Heightens Scrutiny on Crypto Miner’s Energy Consumption

The Biden Administration is making detailed preparations for policy recommendations to lower crypto mining’s energy usage and emissions footprint.

The move marks the government’s further entry to a little-understood industry that critics claim strains the US power grid and threatens climate goals. It follows President Joe Biden’s executive order in March urging federal agencies to ensure the “responsible” mining of digital assets like cryptocurrencies.

Costa Samaras, principal assistant director for energy for the White House Office of Science and Technology Policy, had a conversation with Bloomberg Law media and said: “It’s important, if this is going to be part of our financial system in any meaningful way, that it’s developed responsibly and minimizes total emissions.”

“When we think about digital assets, it has to be a climate and energy conversation,” Samaras further stated.

A report, which is expected in August, aims to study claims that have touted crypto as a societal benefit or criticized it as a climate nightmare and a local nuisance concern, said Samaras.

Samaras mentioned that the White House energy team plans to assess everything from local noise pollution to energy efficiency — comparing Bitcoin’s proof-of-work method with proof-of-stake, which is used by other cryptos and is more than 99% more energy efficient.

“We need to think about what would be the appropriate policy responses under a world that shifted to proof-of-stake, or a world that has some continuous mix of proof-of-work and proof-of-stake. Proof-of-work is energy-intensive by design, but it also increases security.” Samaras stated.

The team will study claims made in recent months—in places like Texas—that grid operators provide mining facilities with flexibility and even pay them to temporarily shut down assets during times of peak demand.

Crypto Hotspot Shifting

Crypto mining is a controversial practice given the excessive energy it consumes. Increasing concerns around huge energy consumption have led to the scrutinization of mining activities in several nations that were regarded to be welcoming environments for the activity.

When China banned crypto in September last year, the global hashrate and the Bitcoin mining map shifted significantly.

Since the China ban, the US has rapidly become the global leader in crypto mining. Key drivers for this are the nation’s access to renewable energy sources, low energy prices (especially in Texas), and pro-crypto policies.

While Kazakhstan sat in second place worldwide as a Bitcoin mining hotspot, the country’s future as a crypto mining hub faces uncertainty following riots that happened in January.

The recent riots in Kazakhstan related to internet shutdowns caused by crypto mining, and the resulting plunge in the price value indicate that cryptocurrency is not free from the impacts of volatile external forces, particularly in the nations where such digital assets are being mined on a mass scale.

Recent calls from governments to improve their levels of visibility and transparency for cryptocurrency could see their appeal as mining hotspots dented.

Exit mobile version