Leading Crypto Exchanges Driven to Comply with Regulations through Regulatory Settlements
Top cryptocurrency exchanges such as Binance, Coinbase, and Kraken are intensifying their efforts to comply with U.S. regulations following recent settlements with regulators.
At the Chainalysis Links conference in New York, compliance officers from these platforms expressed their commitment to strengthening compliance frameworks in order to address past failures and improve industry standards.
Noah Perlman, Chief Compliance Officer at Binance, emphasized the significance of their settlement, stating that it could serve as a model for others in the industry. He also acknowledged that the massive fine and the resulting requirements present an opportunity for Binance to enhance its compliance program.
Over the past two years, these exchanges have faced regulatory actions in the United States. Binance agreed to pay a record-breaking $4.3 billion in fines for violating anti-money laundering laws and sanctions rules.
Valerie-Leila Jaber, Coinbase’s global head of financial crime compliance, discussed the steps they are taking to address compliance-related backlogs. This includes clearing unreviewed alerts that are crucial for investigating and reporting suspicious transactions, as outlined in their consent order with the NYDFS. Jaber emphasized that compliance is an ongoing process that requires continuous investment and adaptation. Coinbase is committed to improving its core compliance controls and enhancing its ability to respond effectively to evolving regulatory demands.
CJ Rinaldi, Kraken’s Chief Compliance Officer, stressed the importance of building trust with regulators by promptly identifying and addressing issues. He highlighted the need for transparency and proactive engagement to avoid surprises in dealings with regulators.
Coinbase settled for $100 million with the New York State Department of Financial Services over anti-money laundering law violations, with a portion of the settlement dedicated to enhancing compliance programs. Kraken paid over $362,000 to settle allegations of violating U.S. sanctions against Iran.
Both Coinbase and Kraken are focused on anticipating compliance requirements as transaction volumes increase. Kraken is actively planning and modeling compliance responses to scale, ensuring readiness for regulatory challenges in the face of growing transaction volumes.