With great popularity come greater responsibilities. Binance [the world’s biggest crypto exchange] has been under pressure from financial regulators across the world and this led the CEO of Binance into making several major potential changes to improve its relations with financial regulators.
Changpeng Zhao, the CEO of Binance has stated that he wants his firm to cooperate with global regulators by getting licensed everywhere. Binance has long touted its decentralized operations and has not listed any headquarters. As a result, Zhao intends to create regional headquarters. “We have to be a licensed financial institution in every country that we operate,” Zhao said. “In the past years, we were startup focused on technology. From now on we going through transformations and changes and starting to be a financial institution … it’s a very strong shift.”
Regulatory issues with Binance
Binance was founded in 2017 in China and is officially domiciled in the Cayman Islands. The firm is by far the largest cryptocurrency exchange platform in the world today, something regulators have taken issue with. In the last few months, Binance has received a string of clampdowns by authorities across the globe. Some jurisdictions have issued multiple warnings while others have banned its operation due to its failure to register with local regulators. Recall that this is not the first time Binance has had to adjust its operations to appease regulatory bodies.
After announcing that it would stop trading tokens representing equity stocks, Binance came under German scrutiny just weeks after its launch. Additionally, the company recently said that on July 19th, it would be reducing the max leverage to 20X to ease consumer protection concerns – a move that would increase Binance trading volumes to $668 billion in June, with increasing popularity in Britain. Yet, it received Britain scrutiny as it was recently barred from engaging in regulated financial activities.
Besides Germany and Britain, Binance has faced scrutiny from the UK, Japan, Canada, Italy, Thailand, and the Cayman Islands. In the United States, however, Binance is under investigation as part of a wider effort to deal with money laundering issues which is a timeless criticism of cryptocurrency that is evident in the mostly unregulated market.
The new plans
Regulators are heading towards a goal which is for Binance to have a headquarters. Interestingly, Zhao buys the idea of Binance establishing regional headquarters around the world although his executive clarified that no specific locations have been decided yet. According to the CEO, This will give regulators a “very easy to understand the structure,”. Given approval by the regulators, making a centralization of its operations would not be an issue for Binance. Zhao emphasizes that he is not pressurized to corporate with the regulators that he is doing this for the sake of his business. “We’ve taken a very strong pivot now.” Zhao adds “I’m a technology entrepreneur. We are doing this pivot to be a regulated financial institution and I would be very open to looking for a leader with a strong regulatory background.”
Furthermore, Zhao says that [if need be] he may step down for a successor that can address these regulatory issues better in his stand.
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