Recognized as the biggest crypto exchange in the world, Binance is offering a number of crypto-based savings products in Uruguay.
It is because of these products that the exchange has been summoned by the country’s central bank, which said that they can only be offered via verified banking institutions, or by equity-issuing companies in the national stock market.
It should be noted that no crypto-specific regulation exists in Uruguay for now.
Crypto savings products
Several regulatory authorities in different parts of the world have turned their focus toward crypto savings products and the Central Bank of Uruguay is the latest one to join this list.
The product portfolio of the Binance exchange in Uruguay recently prompted the monetary authority to summon the exchange.
The institution stated that these products are being offered by the exchange as savings-focused alternatives, even though it has not reached out to regulators for any authorization, or registration.
The institution further asserted that only financial intermediation companies that are registered in the stock market industry as an issuer, or have the authority of collecting deposits can do so.
It said that only these organizations can ask the general public to invest their savings and Binance does not meet these criteria.
Therefore, the central bank called on the exchange to halt advertising these investment products for the purpose of savings.
The crypto exchange promptly responded to these summonses and reports said that it was already communicating with the Central Bank of Uruguay on this matter.
The company can defend itself and share its perspective regarding these crypto investment products. The exchange said that compliance is of the utmost importance to them.
Binance Uruguay said that the only way for the crypto industry to expand and become mainstream is through proper regulation.
The exchange added that it was leading the charge of the development of the blockchain and crypto ecosystem globally.
It also added that it had worked with regulatory authorities, governments, legislators, and law enforcement authorities for providing a secure environment to its clients.
Debate over crypto assets
There is a possibility that this incident might spark a debate about the topic of crypto assets in Uruguay, which has not seen the same level of crypto popularity as other countries in the Latam region.
Indeed, countries such as Colombia, Argentina, and Venezuela have seen crypto popularity rise very rapidly and digital asset adoption has increased significantly.
But, Uruguay is nowhere close to any of these countries and it has not introduced any law for the crypto space as yet.
The Central Bank of Uruguay highlighted crypto-related activities in a road map last year with the goal of introducing a crypto regulatory bill in the future.
It is not the only monetary authority that is working on developing crypto regulation, but the expansion of the crypto industry in Uruguay is comparatively slow.
Nonetheless, Binance may have to deal with the controversy about its crypto savings products in order to avoid issues.