- Binance CEO Changpeng Zhao has said that he recognizes the company needs a “centralized entity” if it wants to please regulators
- Binance has been targeted by regulators worldwide in 2021
- Zhao told the South China Morning Post that they knew they had to do much more to be compliant
Binance CEO Changpeng Zhao has admitted that the company needs a “centralized entity” if it is to overcome its regulatory hurdles. Binance has come under scrutiny more than any other exchange in recent months due to its reach and the scope of its offerings, none of which are regulated. Some regulators have taken action, such as the Thai SEC who have filed a criminal complaint against Binance, while others such as the UK’s FCA have issued continuous warnings to citizens over its usage. In an interview with the South China Morning Post, Zhao admitted that the exchange had realized it had done nowhere near enough to appease regulators.
Where in the World is Binance?
The issue of Binance’s location has long been a bone of contention among financial regulators, with the exchange temporarily locating bits of itself in Malta then the Cayman Islands, leaving no one quite sure where it is based. This has meant that, for all Binance’s talk of wanting to be compliant, they simply can’t do it without setting down roots somewhere on planet Earth.
Zhao admitted this to the Post, saying that “As we run a centralised exchange, we have come to realise that we need to have a centralized entity to work well with regulators”, adding that ““We need to have clear records of stakeholders’ ownership, transparency and risk controls.”
Changes Already Taking Place
There is already evidence of Binance’s shift towards compliance in its demand of KYC for every user and the recent onboarding of Greg Monahan to head up its money laundering division. Zhao knows that the exchange has to do much more to be compliant however, and acknowledged that these demands were coming fast:
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 announced its intentions to “pivot to be a fully regulated financial institution” in July, and Zhao will by now be under no illusions what that will entail.