On Nov. 21, Binance, the world’s largest cryptocurrency exchange, pleaded guilty to breaking U.S. anti-money-laundering laws. Its CEO has stepped down, and the company will pay $4.3 billion in penalties. While the eye-watering fine is getting the headlines, it’s the details of the agreement that really redefine the relationship between government and crypto.
U.S. authorities describe this as a watershed moment for crypto’s compliance with American law. They’re right—and crypto only has itself to blame. Crypto’s creators aspired to create a decentralized money system, with no entry points for state oversight and surveillance. But the crypto economy has become increasingly centralized around exchanges like Binance and Coinbase. While these exchanges allow customers to store and convert money from one cryptocurrency into another, they also give the government a massive opening. Crypto is being tamed, as its central actors agree to implement U.S. rules, extending the government’s reach into the heart of the crypto economy.
Henry Farrell and Abraham Newman, “Binance and the End of Crypto’s Dream to Escape From Government, Wall Street Journal, November 24, 2023.