It was however not without its share of dubious business practice accusations, which have earned the company a bad reputation with regulators all over the world. This is starting to change in 2022, the year when Binance appears to be set on getting itself a legal recognition.
Binance is a result of a singular vision and dynamism of Changpeng Zhao, also called CZ, a Chinese-Canadian computer scientist who learned about Bitcoin in 2013 and got hooked so much he sold his Shanghai apartment to go all-in on it. He founded a centralized exchange called Binance in China in 2017, but had to move it soon afterwards because of crypto-hostile regulations.
From the beginning, the company has been a Jack-of-all-trades. The exchange has been continuously adding more and more cryptoassets, as well as fiat gateways. It now supports over 61 fiat currencies and proposes almost 1’500 crypto trading pairs.
CZ did not stop at a centralized exchange though. In just several years he launched a whole new blockchain called Binance Smart Chain (later – BNB Chain), which is a Proof-of-Stake fork off Ethereum. The blockchain, as well as its cryptocurrency BNB, have allowed Binance to nurture a whole ecosystem built on it: wallets, decentralized exchanges (DEX), DeFi protocols, crypto games…
The company also has a DEX of its own, as well as derivatives trading platform, a Launchpad helping crypto projects raise funds, an education outlet, an NFT marketplace, a crypto charity solution, a wallet, a cloud… most things crypto space has produced, Binance did too.
Since leaving China, the company’s HQ are officially on Cayman Islands, but effectively it is managed from many offices around the world, making Binance somewhat of a headless company with uncertain legal provenance.
For a moment in 2018 it was believed to settle in Malta, but the Maltese Financial Service Authority has later refuted the rumor, saying that the company did not have any authorization to operate in the cryptocurrency sphere on the island.
Understandably, this situation did not please regulators.
The first country to point out Binance’s lack of compliance was the US, formally banning it from servicing its citizens in 2019. In response, Binance US was launched in a partnership with a rather obscure money servicing firm called BAM, which main virtue was an active FinCEN registration.
Since then, several other countries like Japan, South Korea, Hong Kong, Australia, Singapore, Italy and the UK have issued warnings, urging the exchange to comply with their financial regulations, and the UK even went as far as banning Binance in July 2021.
On its way to legitimacy
Crypto increasingly becomes an integral part of financial and regulatory landscapes, and for any crypto service provider with global ambitions compliance is no longer an option, it’s a requirement.
This year marks a turnaround in Binance’s legal strategy, as CZ is starting to deploy his legendary energy on courting financial authorities all over the world. And it already bears its fruit:
- In March, the company obtained a Specialist License by Virtual Asset Regulatory Authority of Dubai;
- in April – a provisional green light from Financial Services Regulatory Authority of Abu Dhabi;
- in May – a Digital Asset Services Provider visa from Autorité des Marchés Financiers of France, a “Category 4” full cryptoasset service provider license from the Central Bank of Bahrein, and most recently – a Cryptocurrency Service Provider registration from the Organismo Agenti e Mediatori of Italy.
Binance is also currently undergoing an authorization procedure in Kazakhstan, a country with which it signed a Memorandum of Understanding last week, promising advisory assistance on crypto regulation and support of the Astana blockchain hub.
Promising support (and putting his money where his mouth is) appears to be CZ’s winning strategy so far. Prior to its official registration in France, Binance committed to invest €100M in the French crypto industry; prior to the Dubai authorisation CZ personally bought an apartment there, publicly praising local authorities for having created a “very good business environment” …
Crypto is still a subject that divides politicians, but proper economic incentives do tend to change their minds. So far, Binance has been able to exploit this tendency, getting itself legitimate all while stimulating crypto industry development across the globe. The empire of CZ is about to grow even bigger.
Written by D.Center