Crypto Firms Should Use Binance’s Settlement As a “Template” For How to Operate, Says CFTC Commissioner Kristin Johnson
Binance’s $4.3 billion fine from the Commodity Futures Trading Commission should be used as a “template” for how to operate, CFTC Commissioner Kristin Johnson said.
Speaking at the Financial Times’ Crypto and Digital Assets Summit: Winter Edition on Tuesday, Johnson asserted that US crypto regulators are trying to establish “guardrails” and bring “order and structure” to the market, Reuters reported.
“My hope would be that we have seen a spike, and what we will see going forward is that these early cases will really be a bit of a cautionary tale for those firms that really do want to successfully operate in this ecosystem,” Johnson said.
The $4.3 billion penalty imposed by the Commodity Futures Trading Commission (CFTC) on the crypto exchange Binance were described as “heightened” by Johnson, with the commissioner citing the CFTC’s previous public warnings to cryptocurrency firms to ensure compliance.
“There’s a common assumption that enforcement actions in the crypto or digital assets ecosystem connote bad actors or bad conduct,” Johnson said. “Admittedly, there is plenty of evidence to support this assumption,” she continued, but noted that in Binance’s case, “the matter and the resolution of the litigation did not involve any allegation of fraud or similar misconduct.”
Johnson clarified that the regulatory agency took action against the Binance because it “simply failed to comply with regulation.” She noted that Binance’s case could provide a “template” for other crypto firms who want to learn how to operate successfully.
“For those firms that really do want to successfully operate in this space, there is an increasingly clear template for how to operate,” Johnson said. “Take the hint.”
Johnson added that going forward, the CFTC would seek to be “deeply thoughtful” on requiring better disclosures at crypto firms that combine different activities under one roof.
Binance made international headlines last month after being fined the largest sum in corporate history. After being convicted of money laundering and other charges, the crypto exchange agreed to pay $4.3 billion to the CFTC, the Department of Justice, and other US government agencies.
The CFTC had previously sued Binance in March for operating as an unlicensed crypto trading platform in the US while trying to hide from regulators.
As part of the deal, Binance founder Changpeng “CZ” Zhao agreed to step down and pay a $150 million fine to the CFTC.