Binance is in talks with sovereign wealth funds to take a stake in the world’s largest cryptocurrency exchange, as it seeks to strengthen relationships with governments and compensate aggressive regulators, its CEO says .
The stock market has faced increasing pressure from regulators this year and believes that investments by sovereign wealth funds would help improve its “perception and relationship” with various governments, Changpeng Zhao told the Financial Times in an interview.
âBut it can also tie us to specific countries. . . with which we want to be slightly careful, âhe added.
Zhao, known as “CZ” and also founder of Binance, said his global entity was in preliminary talks to raise capital from several sovereign wealth funds in addition to raising capital for its US subsidiary ahead of a public listing. . He declined to say what funds the company was in discussions with. âThe size of the ticket involved will not be small. . . it will not be a short process, âhe added.
Crypto exchanges have seen their valuations skyrocket in recent months, following the rising value of bitcoin and other cryptocurrencies. Coinbase became the only publicly traded cryptocurrency exchange earlier this year with a valuation of $ 76 billion, while FTX recently reached a valuation of $ 25 billion in its last funding round, up from $ 1 billion. dollars in February 2020.
Zhao is Binance’s biggest shareholder, which is profitable. Its Singapore operations were supported by Vertex Ventures, the venture capital arm of state-backed investment firm Temasek.
The crypto entrepreneur told the Bloomberg New Economy Forum last week that the platform saw daily trading volumes of $ 170 billion, up from $ 10 billion to $ 30 billion two years ago. Zhao said the turnover rate was “in the billions”.
The attempt to strengthen its capital structure comes as Binance steps up the search for a new global headquarters in cities like Singapore and Dubai.
The company offers crypto trading to consumers around the world, but regulators have criticized some of its high-risk financial products, including derivatives trading.
Until recently, Binance was secret about the location of its founder and insisted it did not have a fixed head office. The company was founded in China but withdrew from the country in 2017, after crypto exchanges were banned there, and established a number of offices in other states.
Binance says it does not have an office or operations in mainland China and only a “small number” of employees remain working on blockchain technology and other “non-platform” tasks. -form “. He claims that no data otherwise resides in China.
China’s ban on crypto mining and transactions illustrates the government’s approach to block outside technology in favor of delivering a local version, Zhao said. Beijing is heavily promoting its own central bank digital currency.
This method has worked in the internet industry with companies such as Alibaba and Tencent, but Zhao said it “may be different” with the free-wheeling crypto industry.
The crackdown on crypto in China has been accompanied this year by increased regulatory oversight from regulators in Europe, Asia and the UK.
Binance last week released a fundamental rights letter for crypto users. The manifesto-like bill addressed a range of issues, including user privacy, and also called for tighter regulation.
There is a perception that the exchanges are “crazy” due to the lack of traditional licenses, Zhao said. âI am a very calm guy. I am not a fool. So we actually want the regulations to be clearer in this space. “
Despite this, regulators, including the UK’s Financial Conduct Authority, say they are unable to properly oversee the activity, as Binance refused to provide basic information such as trade names and business names. functions of its global entities. Big banks, such as Barclays, have even blocked some customers from transferring funds to Binance.
Zhao said he was not worried about illegal activity on Binance’s platform, as the company was “probably better than banks” for having controls in place, such as knowing your customer and knowing your customer. anti-money laundering technology, as the exchange has come under scrutiny.
Binance has increasingly turned to governments where the company can communicate âmore directlyâ with regulators, such as Singapore. Zhao added that he has also spent the past two months meeting with regulators from cities like Dubai, Paris, Qatar and Bahrain.
Most countries do not have clear guidelines for products, including gamified tokens and non-fungible tokens, he said, so Binance was waiting for more clarity before “committing to a single jurisdiction.” .