Regulatory Settlements Drive Compliance Efforts at Leading Crypto Exchanges

In the wake of settlements with U.S. regulators, top cryptocurrency exchanges like Binance, Coinbase, and Kraken are doubling down on compliance efforts. 

Binance’s Settlement

Chief compliance officers from these platforms spoke at a recent industry conference, highlighting their commitment to strengthening compliance controls and staffing to mitigate past failures and enhance industry standards.

During a panel discussion at the Chainalysis Links conference in New York, compliance chiefs from Binance, Coinbase, and Kraken expressed their commitment to strengthening compliance frameworks following recent regulatory settlements. 

Noah Perlman, Chief Compliance Officer at Binance, highlighted the significance of their settlement, stating, “In a sense, our settlement, with a massive fine and the requirements coming from that, probably is a model for others in the industry and will be an opportunity for us to continue to uplift the [compliance] program.”   

Over the past two years, these exchanges faced regulatory actions in the United States. Binance agreed to pay record fines totalling $4.3 billion for violating anti-money laundering laws and sanctions rules. 

Coinbase and Kraken on Compliance

Coinbase’s global head of financial crime compliance, Valerie-Leila Jaber, highlighted efforts to address compliance-related backlogs. This includes clearing unreviewed alerts crucial for investigating and reporting suspicious transactions, as outlined in its consent order with the NYDFS.

Jaber emphasized that compliance is an ongoing process, requiring continual investment and adaptation. Coinbase remains dedicated to enhancing core compliance controls and bolstering its ability to respond effectively to evolving regulatory demands, leveraging internal partnerships with technology teams.

Kraken’s Chief Compliance Officer, CJ Rinaldi, emphasized building trust with regulators by promptly identifying and addressing issues. He stressed the need to avoid surprises in dealings with regulators, highlighting transparency and proactive engagement.

Coinbase settled for $100 million with the New York State Department of Financial Services over anti-money laundering law violations, with a portion dedicated to enhancing compliance programs. Kraken paid over $362,000 to settle allegations of violating U.S. sanctions against Iran.

Coinbase and Kraken focus on anticipating compliance requirements associated with increasing transaction volumes. Kraken’s planning includes modelling compliance responses to scale, ensuring readiness for regulatory challenges amid growing transaction volumes.