Binance in Talks to Remove U.S. Compliance Monitor

Binance is negotiating with the DOJ to remove its U.S. compliance monitor amid evolving crypto regulations and enforcement trends.

Binance, one of the world’s largest cryptocurrency exchanges, is in discussions with the U.S. Department of Justice (DOJ) to remove a key oversight requirement. According to Bloomberg, the talks are focused on ending a three-year external compliance monitor imposed as part of a $4.3 billion settlement reached in 2023.

Binance Negotiates to End AML Oversight Monitor

This monitor was intended to make sure Binance was following laws in the U.S.: particularly in the area of anti-money laundering (AML) and compliance. However, federal prosecutors are now considering whether it is necessary to continue this level of oversight. While no decision has been taken yet, the DOJ may instead require Binance to provide more detailed reports about the compliance of its internal processes.

This possible change is part of a wider trend. In recent months, the DOJ has terminated monitorships for other companies because of issues surrounding cost and how the oversight interferes with normal business operations. As a result, Binance is hopeful that this may be met with similar leniency.

Related Reading: Binance Hires Former Crypto.com Executive to Head APAC: Compliance Game Changer 

The talks are still secret, and people familiar with the matter have not been named. However, the move could be a huge turning point for the way that US authorities regulate big crypto firms.

In addition to the DOJ, Binance is still under the scrutiny of the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN). Back in April, Binance had also held discussions with the Treasury Department. At the time, the company requested being rid of a separate monitor who oversaw their AML compliance.

Moreover, Binance has been caught in politically sensitive situations. Founder Changpeng Zhao, also known as “CZ,” recently served a four-month prison sentence after pleading guilty to violations related with the exchange’s operations. The company was also involved with World Liberty Financial on a stablecoin project with ties to the family of former President Donald Trump. These political relationships have made the case of Binance particularly high-profile.

Binance Hopes for Softer Oversight After SEC Dismissal

Meanwhile, enforcement actions against Binance seem to be dying down. In May the U.S. Securities and Exchange Commission (SEC) dismissed a civil lawsuit against Zhao and three companies belonging to Binance. The case had accused the platform of breaching securities laws. When dismissing the charges, the SEC said they decided a “policy matter.”

Binance.US responded to the SEC’s decision by saying that under the leadership of new SEC Chairman Paul S. Atkins, there was a “meaningful shift” in how the agency views crypto. This statement suggests Binance thinks that regulators might be more flexible going forward.

Still, the situation is complicated. While Binance will be hoping to reduce some of the oversight requirements, it will have to continue to demonstrate strong compliance practices. Monitors, according to DOJ Criminal Division head Matthew Galeotti, sometimes can “interfere with lawful business operations,” but that doesn’t mean enforcement will go away entirely.

In conclusion, Binance’s communications with U.S. authorities may indicate a new stage in the regulation of cryptocurrencies. If the compliance monitor is removed, it may provide some relief for Binance – and set an example for other crypto companies under similar scrutiny. However, regulators will likely keep an eye on the exchange.