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Binance Official Sound Stricter U.S. Laws May Cause Crypto Washout

  • Binance's Chief Strategy Officer worries that US crypto regulations will hinder the industry and cause market instability.

  • The New York Department of Financial Services ordered Paxos to stop minting Binance's stablecoin due to ongoing issues (BUSD).

22-Feb-2023 By: Sudeep Saxena
Binance Official Sou

Binance's Chief Strategy Officer is concerned that strict crypto restrictions in the United States could stifle the sector and cause significant market volatility.

Cryptocurrency experts held out hope that 2023 would bring about a new beginning for the industry after a year of extraordinary setbacks. Instead, the industry has been the target of a ferocious government crackdown in the United States. Late last month, the Securities and Exchange Commission (SEC) imposed fines and other sanctions on crypto lending companies, and federal banking officials released public statements that appeared to be designed to make it challenging for crypto enterprises to function in the nation.

SEC's Crackdown on Crypto

Not the demise of another cryptocurrency exchange or the loss of enormous sums of money, but regulation poses the biggest threat to cryptocurrencies. Patrick Hillmann, the chief strategy officer of Binance, the biggest cryptocurrency exchange in the world, stated that at the very least on Tuesday. According to Hillmann, U.S. cryptocurrency laws are becoming more strict and narrow-minded, which may result in significant market volatility or, if they continue, may suffocate the expanding industry.

Hillmann was quoted as saying, "The U.S. has always been a location that has truly promoted amazing innovation" in reference to the continuing crypto crackdown. Sadly, I believe that what we are seeing now will eventually cost [investors] significantly. 

The fall of the once-second-largest cryptocurrency exchange in the world, FTX, has boosted the enforcement of current crypto regulations by regulatory bodies in the United States. In a joint statement released in January, the Federal Reserve, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency cautioned banks about the dangers of exposure to "crypto-asset-related activity." The announcement came along with a caution to the general population.

In the weeks that followed, the SEC fined celebrities who supported cryptocurrencies seven figures and outlawed "staking" features, which reward users for holding specific coins. The California-based Kraken exchange was fined $30 million earlier this month for making improper disclosures about its staking feature.

Crypto Washout About To Happen?

The growth of crypto rules that target stablecoins and exchange tokens worries Hillmann the most. The value of stablecoins and exchange tokens is linked to an outside asset, like the dollar or gold. In cryptocurrency exchanges, transactions are facilitated through exchange tokens. When you take it away from users in a situation like this, the safety net vanishes, according to Hillmann.

He added that there is a movement on to get American financial institutions to quit supporting cryptocurrencies. As a result, according to Hilmann, cryptocurrency investors are unable to both easily withdraw their money from the exchanges and move it to a secure location.

In response to unresolved difficulties with Paxos' handling of its cooperation with Binance, the New York Department of Financial Services ordered the blockchain platform Paxos to stop minting Binance's stablecoin (BUSD). BUSD's pricing was still set at one dollar at the time of writing, although it was losing market share to competitors like USDC and USDT.

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