Crypto giant Binance gets targeted by central bank in Uruguay

The Central Bank of Uruguay (BCU) asked Binance, a dominant force in crypto trading worldwide, to make representations to the regulator after it found that the public was being offered “buy cryptocurrencies as part of a savings-type investment” through advertisements on social networks, along with “the promise of certain returns” on the investment.

The BCU requested so the company can “formulate its disclaimers and present its defense” when it goes before the Financial Services Superintendency, according to a release from the institution published in the Official Gazette last week.

The regulator mentioned a draft resolution on the matter, noting that “it is appropriate to warn those responsible for operating under the Binance name that they should not carry out the advertising mentioned above,” referring to the offer to buy cryptocurrencies as a savings mechanism.

“The invitation to the public to contribute their savings can only be made under the approved form of acceptance by financial institutions licensed to accept deposits on the market, or as an issuer registered in the securities market register,” the BCU release continues.

In response to Bloomberg Línea’s inquiry, Binance Uruguay responded with a written statement saying it was aware of the notice and that the company “has already started a dialogue with the authority.” The company asserted that it is “fully committed to compliance” and that according to its criteria, “regulation is the only way for the industry to expand and reach the general public.”

“Binance underscores that it is a global leader in the development of the blockchain and crypto ecosystem, working with regulators, legislators, governments, and law enforcement to ensure the safest possible environment,” the statement added.

The BCU said through its communications section that it does not wish to comment on the matter.

Uruguay does not have a specific regulation for crypto assets. Last December, the BCU presented a framework document on the aspects of virtual assets it believes should be regulated. In May, it published a draft law but has not yet entered into force.
Two levels of discussion

Juan Diana, a lawyer at Brum Costa Abogados who specializes in financial system regulation, told Bloomberg Línea that “the possible warning and the request for the company to provide explanations” open up two possible levels of discussion.

One level of discussion, according to Diana, is substantive, “in which consumer protection aspects will play a role.” “The second will relate to whether Binance’s activity can be considered a BCU-regulated activity.

In that case, we will move on to a more in-depth discussion that will address some of the interpretation difficulties that arise from the current regulations,” he added. When asked, the expert indicated that he could provide an initial analysis of the situation, as access to the complete dossier would require an in-depth analysis.

In any case, he pointed out that the BCU is advancing a draft law “aimed at expanding its competencies in the field of financial regulation and supervision to include the so-called virtual asset providers.” “In this way, the agency will be able to issue specific regulations and clarify the game rules for these types of players,” Diana said.

Another point the lawyer pointed out is that the subpoena was issued through a publication and not through direct communication with the company. This is the case, he said, when the regulator does not have a physical or electronic reference address with its local managers.

BINANCE SURPASSES COINBASE

According to Glassnode data provided by crypto analyst Will Clemente, Binance has overtaken Coinbase to become the largest exchange with the most BTC held.

A Glassnode Insights report noted that over the past two years, Coinbase had experienced net outflows of Bitcoin totaling more than 450,000 BTC, caused by the transfer of these coins to new wallets unrelated to the Coinbase entity. And over the same period, Binance’s net balance increased by about 300,000 BTC.

With information from Bloomberg in linea

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