Binance plans major overhaul post its regulatory woes
Binance, the embattled crypto exchange, plans to make a series of changes in its corporate structure as it scrambles to get back into the good books of the regulators in the various regions.
The exchange has been having a tough time with regulators in various countries over the last few months which has led it to shut down its business in Malaysia, shut down in derivatives business in many parts of Europe, face investigation from authorities in India, and also face shutdown and scrutiny from the regulators in the UK.
All this has placed a lot of pressure on the exchange and the demons of having expanded too fast in too little time with scant regard for regulation is now coming back to haunt the exchange. Of course, to Binance’s credit, when it started its business several years ago, there were no regulations surrounding crypto in most parts of the world and so even if they wanted to get regulated, they couldn’t have as the regulators themselves were not sure on how to handle the crypto ecosystem and if they wanted to handle it at all.
That has changed over the last couple of years with the crypto industry witnessing massive growth and interest from institutions and major investors and this has led the regulators to come up with rules and laws very quickly. This has in turn caught the old industry entrants unawares and firms like Binance have been very slow to react to these regulatory requirements.
Now their CEO, CZ, has come around to the fact that the exchange needs to get licensed everywhere and become compliant as much as it can in every region where it plans to operate. This might require the company to launch a subsidiary for each region and that subsidiary would need to get regulated in that region, an approach which the likes of FTX and other exchanges seem to be doing already. Each of these would have regional CEOs as well leading to a centralized authority controlling all these subsidiaries.
CZ has also expressed his willingness to step down as his background in regulatory knowledge and compliance is pretty weak and regulators are likely to favor the company to have someone at the helm who comes in with good regulatory background and standing. While these changes and lean towards compliance and regulation could throw off many users in the short term, this is likely the best approach that the exchange should be taking which would yield dividends in the long term. A strong Binance is very important for a strong and flourishing crypto industry.
