Binance CEO Changpeng Zhao has revealed extensive plans aimed at appeasing governments around the world in anticipation of a regulatory showdown for the crypto industry.
In an open letter, ‘CZ’ discusses the progress the company has made since founding in July 2017, and admitted there had been some serious mistakes over the course of the exchange’s rapid growth.
However, the crux of the letter is really focused on how Binance has begun to respond to these regulatory issues and their pre-emptive plans for helping to guide the future of compliance standards for the crypto industry.
The CEO points out that Binance has already been leading the way – in lieu of clear guidance from regulators – with moves such as bringing in rules against insider trading, establishing a fund to offer security for stored assets, and enhancing listing standards such as the introduction of wallet firewalls.
The Binance Academy has also been a big proponent of investor education, offering tutorials for amateurs.
Looking to the future, Zhao hinted that increased regulatory activity was a useful indicator that cryptocurrencies were being taken seriously.
“More regulations are, in fact, positive signs that an industry is maturing, because this sets the foundation for a broader population to feel safe to participate in crypto,” he said.
“I believe a well-developed legal and regulatory framework in the long term will be a solid foundation that truly makes crypto essential in everyone’s daily life.”
To this end, Binance has revealed a swathe of compliance plans:
- Anticipated doubling in the size of the regulatory compliance team.
- Hiring more expert regulatory advisors.
- Extending compliance partnerships (including with law enforcement agencies).
- Increased localisation of business operations to provide a regulatory anchor.
Needless to say, the regulatory pressure has finally caught up with Binance, but their concerns and preparations aren’t without good reason.
So far in 2021, there has been a wave of regulatory attempts to gain control of the embryonic cryptocurrency industry, and while the SEC has curiously omitted cryptocurrencies from this year’s regulatory agenda, it is clear that Binance is preparing for what Zhao deems a ‘tipping point’ in crypto regulations.
Regulators Target Binance
Over the course of Binance’s rapid four years of growth into the world’s largest cryptocurrency and altcoin exchange, the company has been plagued by regulatory issues.
In June 2019, the exchange suspended services for US customers in response to pressure from the SEC to create a US-specific Binance entity, forcing the Malta-based firm to drop a regulatory anchor.
However, by the following September, 13 US States were still moving to restrict access to the now-compliant exchange.
Last year, Binance was among 42 crypto-firms accused of operating in violation of US securities law and consequently hit with lawsuits.
The April 2020 complaint filing against Binance stated: “Binance and the Issuers wrongfully engaged in millions of transactions – including the solicitation, offer, and sale of securities – without registering the Tokens as securities, and without Binance registering with the SEC as an exchange or broker-dealer.”
But with the SEC backing down over cryptocurrencies for the time-being, it seems that Binance has pushed back onto the front foot, pre-empting anticipated future measures in an effort to be seen as a friendly and compliant exchange.
Ending his letter, Zhao wrote a very clear message to regulators:
“We humbly welcome more constructive guidance to help us to grow better,” he concluded.
“We humbly welcome more capable talents and experienced advisors to join us to build better.
“I and everyone at Binance are ready and look forward to being a partner in developing and following guidelines that will help the industry grow in a sustainable manner. And together, we will help to increase freedom in the society in a sustainable and responsible way.”
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