Binance’s Compliance Chief: Crypto Treated Unfairly Compared to TradFi

  • Binance’s Compliance Chief says his job is one of the toughest in compliance.
  • Regulators’ approach to crypto is far harsher than their approach to TradFi.
  • Many different crypto firms continue to face regulation by enforcement.

Remaining compliant and appeasing crypto regulators continues to be an uphill battle for many companies. Binance, continually in the sights of regulators, has said that there is a disparity in how regulators are approaching the space. 

Noah Perlman, the recently hired global chief compliance officer at Binance, has compared his experience in traditional finance with his time in crypto and noted a huge difference in approach. Crypto regulation, especially in the U.S., has become regulated by enforcement, prompting Perlman to state his job is one of the “most challenging opportunities in compliance.”

A Different Approach

Compliance and regulation of even traditional finance still have many gray areas, but Perlman said that when treading in those areas, regulators are a lot more understanding. The Binance man said in traditional finance, as long as decisions are made in good faith and are in line with the principles required, companies are not prosecuted as crypto firms are. 

“The expectation [in traditional finance] is that they [regulators] might tell you ‘all right, well, just don’t do it that way anymore,’” he said at the Links NYC conference on April 4. “But at least you have something to stand on.”

“Very difficult here in crypto, where you try to apply the same mindset, and all of a sudden, it’s not a discussion, it’s a Wells notice or worse.” 

Crypto in the Spotlight

Companies like Paxos and Coinbase have recently been served Wells notices from the SEC. For Coinbase, the recommendation for enforcement from the SEC came in a manner reminiscent of that explained by Perlman.

Coinbase proactively sent the SEC a petition explaining why their staking services should not be considered securities, but the firm was served a Wells notice a day later. Furthermore, Coinbase asked the SEC to outline which specific tokens were being contested as securities, and the SEC refused.

Binance has also caught a lot of attention from regulators, with the CFTC bringing a lawsuit against Binance, its CEO – Changpeng Zhao – and related entities on March 27. Furthermore, rumors have surfaced that Interpol has issued a Red Notice for the Binance CEO.

On the Flipside

  • Binance does not have any business in the U.S., where the majority of the hardline policing of crypto is happening, but the SEC is contesting whether Binance.US may be running an unregistered securities exchange.

Why You Should Care

Crypto regulation continues to be a hot topic, but if there is a disparity between how crypto is treated compared with traditional finance, the potential for digital asset innovation will be severely curtailed. 

Read more about Binance’s CFTC lawsuit:
Binance Lawsuit Explained: Why CFTC Involvement Is a Big Deal

Read more about blockchain gaming on Cardano:
Cardano Gaming Goes Interoperable Through Paima Layer-2 Launch

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