September 16, 2021
Binance, the world’s largest cryptocurrency exchange, is making a spin to a licensed financial institution by reconditioning itself into a centralised business, as it navigates through numerous regulatory red flags that threatens to set back its past four years’ of growth, according to the South China Morning Post.
The exchange, which has been hit by multiple regulatory warnings this year by watchdogs of UK, Hong Kong, Japan, Singapore, has started to initiate dialogues with regulators as it looks to win their approvals and distance itself from the ongoing wave of crackdowns on unlicensed platforms globally, said founder and chief executive Zhao Changpeng.
“As we run a centralised exchange, we have come to realise that we need to have a centralised entity to work well with regulators,” said Zhao, in an interview with the South China Morning Post. “We need to have clear records of stakeholders’ ownership, transparency and risk controls.” Furthermore, Zhao also added, “As the largest player in the industry, we need to prepare ourselves for the shift. We are making changes to make it easier to work with regulators”.
Binance has made efforts to embrace best governance practices, but it has faced challenges. While it made many high-profile hires recently, including former regulatory and finance executives in a bid to facilitate dialogue with regulators, not many have stayed long enough. Debate is also raging about whether cryptocurrencies should be considered as “securities” or means of payment. But Zhao said that bitcoin can be the national currency for smaller nations, pointing to El Salvador’s move to adopt bitcoin and diversify from the US dollar. Zhao said the roll-out of central bank digital currencies could end up helping increase the acceptance of cryptocurrencies. “Once people start using central bank digital currencies locally, then they’ll use bitcoin to pay their friends in other countries,” he said.