As policymakers around the world sound the alarm on digital currencies, the CEO of Binance, the world’s largest crypto exchange, is still hungry for growth.
His next target: Europe.
“We want to settle in several places in Europe,” Changpeng Zhao — or CZ, as he likes to be called — told POLITICO in a video call last week. The talk took place between dates in Brussels, as CZ (pronounced Sea-Zee) met with Commission officials and MEPs developing EU rules for certain crypto assets and the companies that run them. emit.
He declined to name their names, but as far as locations go, it could be “France, Portugal, or even Gibraltar and many other places,” he said.
Why these countries in particular? “Those places have been very friendly to us and that’s where we’re going,” said the 44-year-old, who moved from China to Vancouver with his family in the late 1980s.
Recent reports claiming that Binance will establish its headquarters in Ireland is false, he added.
Finding friends is probably the best way to expand one’s business empire across the bloc, which has taken a cautious approach to cryptocurrencies. And this caution is not unique to the EU. Policymakers and regulators around the world have cracked down on the growing sector, warning crypto enthusiasts against investing too much of their savings in digital assets.
Binance is also under scrutiny, as national watchdogs in Japan, Thailandthe Cayman Islands have warned that its operations are unauthorized. (A Binance representative said it does not run exchange services from these countries.) And on Monday, Binance announcement that it would shut down crypto trading in Singapore after the island nation’s watchdog slap the stock exchange’s global website on an “investor alert list” in September.
Some of the most recent actions have come from US lawmakers, who have brought together top crypto industry CEOs to debate how best to control the market. It is now approaching $2.5 trillion, largely due to investor appetite alone.
In the eyes of policymakers, it’s not just people’s money that could be at risk. Identities can be masked during crypto transactions, making illicit finance that much easier. And strong adoption of cryptocurrencies could outpace the use of national currencies in some countries to create financial instability, International Monetary Fund staffers said last Thursday as they called for global action.
“There is no evidence that crypto-assets have performed or are performing socially or economically useful functions,” European Central Bank board member Fabio Panetta said during a briefing. speech in Rome on Friday. These digital assets are used to dodge taxes and fund criminal activities, he added.
“Overall, it is difficult to see any justification for the existence of crypto-assets in the financial landscape,” the Italian warned.
Prohibitions and Warnings
CZ, who was born in Jiang Su Province, launched the exchange in China just four years ago when one Bitcoin was worth around €4,000. Since then, the value of Bitcoin has jumped to more than ten times that figure, and that of Binance profits reached 900 million dollars, according to Zhao.
It has also actively sought out new markets – especially since Binance pulled out of China when Beijing began banning crypto exchanges shortly after its launch, a crackdown that ultimately led to a ban on trading assets. digital in September. He enabled this expansion by creating a series of legal entities established in Asia, Africa, Europe and the United States.
CZ is now looking to expand its presence in Europe, where the lack of a single European license means Binance has to set up shop in one country at a time to offer its services. This expansion could attract the attention of the EU securities regulator, which warned in March that people risk losing all the money they invest in cryptocurrencies.
The authorities in Germany, Italy, Maltaand Lithuania, meanwhile, have banned the crypto exchange from offering financial contracts that can carry a lot of risk. Binance took of these offers in response, but continues to offer spot trades for crypto assets.
The regulatory crackdown has been somewhat exaggerated by the media, CZ said, pointing to a run-in with the UK’s Finance Conduct Authority. The British watchdog made headlines in late June when he order Binance will cease all regulated activities in the UK Two months later, the FCA said the exchange had complied with all aspects of the requirements, but added that Binance “is not capable of being effectively supervised” given its global structure and lack of a fixed headquarters. In other words, UK citizens can use Binance for crypto transactions, but at their own risk.
“Contrary to public opinion, we [have] a very collaborative relationship with the UK FCA, to the point that they were able to update the first warning within exactly two months of the first warning being issued,” CZ said. He added that the location of the exchange’s legal headquarters will be announced in due course. time.
“Unfortunately, when many media outlets cover crypto, they tend to put on a negative spin, [such as] Bitcoin is used by drug lords,” he said.
More is better
The regulatory attention doesn’t bother CZ so far. It encourages policymakers to go beyond creating anti-money laundering safeguards and start developing new standards on sharing business data, decentralized finance and digital wallets that can hold cryptocurrencies. CZ stopped short of saying what these rules should look like, as long as they work in practice.
“We don’t offer an opinion on what the regulations should or shouldn’t be,” he said. “We care a lot more about the implementation aspect.”
For now, crypto regulation in the EU remains light. Last year, the Commission made its first big push to regulate the crypto asset market in a bill dubbed Mica, which is still making its way through the Brussels legislative pipeline. A second bill emerged over the summer aimed at identifying people moving funds in the crypto market to prevent money laundering.
MiCA has disclosure requirements and enacts safeguards for investors and new oversight powers, but it is also designed to target a certain class of crypto assets called stablecoins – a digital token tied to a basket of financial products to maintain their stable value. The specific language in the bill is intended to address concerns about a Facebook-led project to introduce a payment system called Diem with stablecoin technology.
The European Central Bank is also developing a digital euro to ensure that monetary policy remains relevant in the digital age as cryptocurrencies grow in popularity.
But central bank-backed digital currencies (CBDCs) are unlikely to threaten crypto assets given the bureaucracy that will likely come with it, CZ said.
“If you want to move a million dollars from China to invest in real estate in Belgium [with CBDCs], you’ll have to go through a lot of approval processes” that will likely take six to 12 months, he said. “Using bitcoin it probably takes ten minutes and it will be very cheap.”
Should countries instead adopt Bitcoin as legal tender, as El Salvador did? “I think it’s a fantastic idea,” he said. “The more adoption we can do and the more education and places we can introduce Bitcoin and crypto, the better.”
This article has been updated.
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