The recent wave of macro FUD has increased legal scrutiny on centralized exchanges. 

The core issue is simple: The main risk holding back crypto investment is the possibility of security failures that result in user losses.

Unlike central banks, where risk is centralized, in crypto this burden shifts to exchanges, which effectively handle bank-like functions such as custody and daily liquidity management.

In a report by The Information, Binance, the largest centralized exchange, has come under fresh scrutiny as the US Treasury Department reportedly pressured it to fully comply with the monitoring framework tied to its 2023 agreement.

For context, that agreement placed Binance under an independent monitor to improve compliance…