Binance seems to be willing to give up some of its independence, by welcoming sovereign wealth funds into its capital, in order to ease the regulatory pressures the exchange faces.
Binance and regulators: sovereign wealth funds from different countries to warm relations
In a November 23, 2021 interview with the Financial Times, Binance CEO Changpeng Zhao said the exchange is currently seeking global funding in an effort to improve its relationship with regulators. The exchange is under a lot of pressure from regulators in different countries. It has embarked on a strategy of selling a stake in the company to sovereign wealth funds in order to ease its relationship with regulators.
Still, CZ mentioned the risk related to such an ambitious strategy, which is that of tying Binance to certain countries:
“But it can also tie us to specific countries, which we want to be slightly cautious with.”
Binance now seems to want to get in the good graces of regulators, even going so far as to eventually locate its headquarters in Ireland – or even France – when the company seemed in the past to want to operate according to a decentralized logic at the global level.
Changpeng Zhao did not reveal for the moment the names of the funds involved in this process, which will not be “short”, given the importance of the amounts at stake.
Binance, better than the banks: when CZ sells the regulatory compliance of its exchange
Despite warnings from at least a dozen governments against the exchange, Changpeng Zhao is making a reassuring speech about the compliance of the crypto exchange with the standards in force in finance. He even goes so far as to say that Binance is “probably better than the banks” regarding the application of know-your-customer (KYC) procedures and compliance with anti-money laundering provisions.
Changpeng Zhao also highlighted Binance’s significant growth over the past two years. Daily trading volumes reached $170 billion in November 2021, up from $10 billion to $30 billion two years ago.
Falling in line to avoid a regulatory cataclysm: Binance is continuing its efforts to make friends with regulators, with this large-scale fundraising that could therefore end with a few countries coming to the exchange’s shareholder table.