Given the level of scrutiny on crypto exchanges in the US this week, we sought some expert opinion to make sense of it all. Caroline Bowler, CEO of Australia’s BTC Markets exchange, gave us some great responses…
We’ll get to those further below. First, though, for quick context, have a gander at our Mooners & Shakers updates from today and yesterday, but, in a nutshell:
The US Securities and Exchange Commission’s (SEC) targeting of major global exchanges Binance and Coinbase in the space of 24 hours or so is making headlines across crypto and financial sites globally today. Here’s some of what we know:
• Coinbase has been charged by the US SEC for operating as an unregistered securities exchange, broker and clearing agency. This comes a day after the SEC targeted…
• … Binance and its CEO Changpeng “CZ” Zhou, alleging the exchange and its boss misled investors about internal controls, secretly allowed customer funds to commingle, and diverted customer funds “as they please”.
• The SEC is also ramping up things further regarding Binance.US, Binance’s American-based entity, by seeking a temporary restraining order to freeze Binance.US assets. US crypto media site CoinDesk has more on that here, as does Bitcoin Magazine…
‘The outcomes will have an impact worldwide’
Hi, Caroline. Thanks for making time. CNBC [as seen above] has compared the targeting of crypto exchanges in America with the final scene in The Godfather, as Gary Gensler ‘goes after’ every major player in the US. But how do you see it? Is it concerning times for the crypto industry over there, and for the market globally?
BTC Markets CEO Caroline Bowler: I think that CNBC may be editorialising developments with that framing. But yes, it is pivotal for crypto in the US and the outcomes will have an impact worldwide.
However, in my view it is important not to conflate these cases. One is with a US-listed company [Coinbase] who has been transparent about their desire to fulfil US regulations on crypto and its interactions with the SEC for a considerable period.
The other is an organisation without a head office, with decisions fully centralised with their CEO, accused of infractions like FTX. Market manipulation and comingled client assets are alarming accusations, for investors expecting to trade on fair and transparent markets.
Do you believe the global crypto market just needs to weather this storm and will then get through it okay?
I think that unfortunately for both organisations, staff and their clients, the coming period may be tumultuous. The outcomes certainly will be significant, in either case.
But crypto is bigger than any one company or any one person – we’ve been shown that repeatedly. I am also firmly of the belief that we are still in the early days for cryptocurrency.
This will be a different industry and with a refreshed bench of “significant players” in five years’ time.
Will this be a catalyst for more US-based crypto entities to pack up and leave the US?
I would think, at present, that this would further weaken appeal to launch in the US market. Certainly not until we’ve seen the outcomes in the Coinbase and Ripple cases more specifically.
These will give greater surety or a pathway for crypto exchanges and their listings process.
‘Use cases for Bitcoin and Ethereum remain unchanged’
Are there any obvious key negatives/positives for investors to take away from these latest developments?
The positives are that the SEC is taking the investigation of market manipulation and protecting client assets seriously. Certainly, that is a benefit to US investors and hopefully it will have a knock-on to any other exchanges or brokers who are operating outside of investor protections. In the longer run, that is a net benefit to all.
Negatives are the reputational damage to two significant global players in the crypto industry. It may also weaken trust in crypto institutions to do the right thing, in the absence of workable regulation.
Does any of this impact the functionality of Bitcoin or Ethereum, for example? No. Their use cases remain unchanged.
Should the Australian crypto industry be concerned?
And how do you think the industry here in Australia might be affected by this? Binance Australia has run into some banking roadblocks here. Is that a concern for other local exchanges including BTC Markets? If not, can you explain why?
I think that every crypto exchange and broker around the world will be closely watching what happens in these instances. As we know, the industry in Australia has been working closely with successive governments, via the Treasury department to shape appropriate and proportional regulation for our sector.
We are committed to that process and believe it will bring the right standards and outcomes for crypto clients in Australia.
As for BTC Markets, we have long adopted an approach that mirrors financial regulation in our processes and offerings. We are keen to get the right results for Australia from the regulatory consultation process and are positive about our future here.
Founded in 2013, BTC Markets is one of Australia’s oldest and most respected crypto exchanges. BTC Markets is not a Stockhead advertiser and this is not a sponsored piece.