Our industry has reached a stage of development and maturation, where regulatory compliance is inseparable from user experience and security, commercial success and responsible growth. The exact start of this period is not clearly established, but in my opinion, Binance has every right to claim to have triggered this new era. In November 2023, we took unprecedented action in the blockchain space by taking responsibility for our historical problems and admitting that even our status as a young company in an emerging field, amid uncertainty regulatory, was not a valid excuse for our too lax compliance controls.
We learned this lesson the hard way, but it allowed us to lead the way for the rest of the industry. We invited other players to study our failures and our improvement measures, and to learn from our experience so as not to suffer these same difficulties in turn so that the entire ecosystem and its users can benefit. We also knew that establishing compliance standards for our dynamic industry was only part of the solution, and that the preparation and willingness of other major players to comply with these standards was equally important. Binance continues to fulfill its end of the bargain, but are others in the industry doing enough to improve their compliance accordingly? I don't think their actions are enough at the moment, but I hope that will change.
The evolution of compliance, real teamwork
In recent years, we have invested significant resources in improving our compliance and security programs and staff to position Binance as the industry benchmark in these areas and to set an example for our peers in the crypto sphere. . We are proud of the culture of compliance, security and transparency that we have created and continue to maintain through our efforts.
These improvements include significantly expanding our internal detection and analytics capabilities to combat money laundering (AML), including monitoring on and off blockchain, strengthening our identity verification protocols (KYC) thanks to the services and products of the best third-party providers in the sector to equip our team and increase our technological resources, improving our market surveillance, and creating the largest compliance department in the fight against financial crime of the industry, responsible for assisting law enforcement agencies around the world with their investigations involving crypto and teaching them the skills and expertise needed to combat financial crime. Each year, we found that quantitative indicators reflecting the effectiveness and consequences of these efforts increased, while estimates of illicit activity in the sector decreased.
Far from taking credit for all the positive changes we've seen, we've always said it's a team effort: our greatest efforts will never be able to bring the entire sector to a highest level of compliance and maturity without the active support of our peers ready to fulfill their side of the contract. Binance sought to build momentum across the entire industry by beginning to invite other major players in the digital asset space to work together to build trust, implement responsible practices, and improve transparency and compliance across the board. .
Propose a unified trust-building framework for all centralized crypto exchange platforms, make the code of our proof of reserves (POR) system open source (open access), and much more: our initiatives promote the massive participation of other blockchain and Web3 companies. Above all, we wanted our compliance progress, the result of painful mistakes and grueling work alongside regulators, to begin to be replicated industry-wide. Some improvements in this direction are already apparent, but I think others in the sector are not doing enough.
Lead or let yourself be carried
We are convinced that when a wave of radical and positive change sweeps through a sector, every player benefits. This theory applies to improving compliance across our industry: when all the big players guarantee full compliance of their services and products, the least responsible entities will be forced to follow suit or will be excluded. We will then enter a virtuous circle of ever more solid trust which will stimulate adoption. But who should be behind this crashing wave, and who is waiting to benefit from it? One thing is certain: Binance is not alone in creating this wave. It is the fruit of all of our work, and it is our users who should benefit from it.
We are aware that today, some of the largest entities present in the sector, which are also the most firmly established there and which should be at the origin of the change to offer the fruits to the entire ecosystem , do not exert their greatest efforts. Some of them ignore fictitious trading practices, while others have not yet put in place effective transaction monitoring and control measures, and several even authorize sanctions violations. Unfortunately, there are companies that make many of these mistakes.
These companies have not yet suffered the same consequences as Binance, but they may not avoid them indefinitely. Even while escaping immediate regulatory scrutiny (a laxity far from justified) and the sanctions that result from it, failing to adopt compliance best practices will contribute in the long term to eroding user confidence and lowering volume. of activity. More importantly, regardless of the tactical benefits to be gained from permissive anti-money laundering and identity verification policies, such behavior ultimately hinders the growth and maturation of the entire industry and harms its participants. and to users to a much greater extent.
This is why today I am calling on my peers to learn from Binance's mistakes so as not to repeat them, because it would cost you dearly. Don’t wait to ride the wave; create it. Currently, full compliance is all the crypto and blockchain industry needs to stay on its explosive growth trajectory, and it’s also what our users want and demand. Ultimately, this is what will help our innovative and mission-focused sector move closer to its ultimate goal: improving financial freedom and making people’s daily lives concretely simpler. So, be the wave!