Binance’s new US boss, Coinbase ending up in regulatory crosshairs and El Salvador making history with bitcoin were among the cryptocurrency sector’s top news stories this week.
Crypto exchange Binance has appointed a new president of its US business, providing some stability to the firm’s operations after the departure of its CEO only four months into the job.
Former Ant Group and Uber exec Brian Shroder has been hired as president of Binance.US, the firm announced on 9 September, and will also join the company’s board of directors.
In this new role, Shroder will oversee the company’s strategy and execution, fundraising, business and corporate development as well as manage the firm’s legal, human resources, and product functions.
It comes after Binance’s US chief Brian Brooks quit unexpectedly last month, citing strategic differences as regulatory scrutiny of the company heated up. Binance was issued with regulatory warnings in several jurisdictions including the UK, Italy, Germany and Hong Kong, as watchdogs feared it was operating without proper authorisation.
The firm is also in the process of securing further funding, its global chief Changpeng ‘CZ’ Zhao said this month, ahead of a planned initial public offering of its shares within three years.
Shroder said Binance is a “regulatory compliant, profitable enterprise” in the US with millions of customers.
“Having previously worked for several hyper-growth companies, it is clear to me that Binance.US has all the right ingredients to become the largest and most successful cryptocurrency and digital asset exchange in the United States,” said Shroder in a statement.
“Furthermore, I look forward to sharing our exciting story with the broader investment community as we begin our journey towards IPO.”
Coinbase under scrutiny
Coinbase’s chief executive Brian Armstrong said that the US Securities and Exchange Commission intends to sue the crypto exchange in court if it goes ahead with plans to let users earn interest on lending cryptocurrency.
The largest US exchange for digital assets, which listed its shares in New York earlier this year, said on 8 September that the SEC handed it a Wells notice in relation to its Coinbase Lend program, signaling its intention to sue the company in court.
As a result, Coinbase said it won’t launch Lend until at least October. Armstrong accused the regulator of refusing to inform the business of why its product breached SEC securities rules.
Coinbase said in a statement that it has been engaging with the SEC for nearly six months and that it didn’t believe its Lend program qualified as a security, which it asserted was the regulator’s main concern.
Earlier this month SEC chair Gary Gensler had issued a warning to the cryptocurrency market, urging companies to ask for permission before launching a product, rather than begging for forgiveness.
El Salvador banks on bitcoin
The small central American nation of El Salvador this week became the first country to make bitcoin legal tender.
A glimpse of what the future of crypto could look like arrived on 7 September, where El Salvadoran citizens can now pay their taxes, buy a house and shop in bitcoin.
However the launch was plagued with technical difficulties, with the government’s official Chivo bitcoin wallet being forced offline for several hours as servers struggled to meet demand.
Cryptocurrency prices also suffered during the debut, as bitcoin weathered a massive sell-off on 7 September. The token was trading at around $47,000 that afternoon, down 9% in 24 hours, after dipping to $42,900 in the morning.
Other cryptocurrenciess were also affected, including ether, down 12% to $3,460.
The selloff may have reflected profit-taking from traders after prices started rising in late July, with bitcoin gaining more than 50% since that time. Crypto watchers also blamed technical factors for the market downturn.
FCA chair ponders crypto’s future
The chair of the UK’s Financial Conduct Authority issued a stinging rebuke to cryptocurrency promoters at the start of the week, as he laid out the potential ways the watchdog might regulate the sector in future.
Charles Randell highlighted an Instagram advert posted by celebrity influencer Kim Kardashian West earlier this year as emblematic of cryptocurrency scams, after she failed to disclose that the token she was promoting had only been created a month before by unknown developers.
He also questioned whether the FCA should bring cryptocurrency regulation under its remit, voicing concerns that in doing so, it might provide more credibility to the sector.
“You can buy gold and other commodities, foreign real estate, foreign currencies, or even old school tokens like Pokémon cards, using unregulated markets. There is no shortage of consumer harm in many of those markets,” said Randell in a 6 September speech.
“So why should we regulate purely speculative digital tokens? And if we do regulate these tokens, will this lead people to think that they are bona fide investments? That is, will the involvement of the FCA give them a ‘halo effect’ that raises unrealistic expectations of consumer protection?”
The UK has yet to agree clear legislation on cryptoassets, though a call for evidence on the matter by the Treasury is currently underway.
The FCA has stepped up its efforts on regulating crypto in recent months, including by issuing bans against crypto exchanges appearing to operate without proper authorisation including Binance and Coinburp.
Robinhood takes steps to tackle crypto volatility
Robinhood users will soon be able to schedule their crypto portfolio to buy new coins as frequently as every day, as part of a new tool launched by the online trading platform.
The trading app said on 9 September that users can set up the feature, starting at an investment of $1, to buy new coins without paying a commission on a daily, biweekly or monthly schedule. It will gradually become available to US users outside of New York this month.
“Saving is a habit and recurring investments introduces a strategy to grow holdings over time while potentially reducing the impact of market volatility,” Robinhood said in a 9 September blog post.
The feature is planned around a strategy known as ‘dollar cost averaging’, it said, which encourages investing at regular intervals to smooth out price swings.
Cryptocurrencies have been growing in popularity among retail investors in 2021, but have been marked by several significant price flash crashes.
To contact the author of this story with feedback or news, email Emily Nicolle