Cryptocurrency exchange Binance is about to move away from its long-standing ‘decentralized headquarters’ narrative as it faces global regulatory headwinds.
In a television interview with the South China Morning Post on Thursday, Binance co-founder and CEO Changpeng Zhao was asked how Binance is preparing to apply for licenses in jurisdictions that have clearer licensing regimes.
In response, Zhao acknowledged that Binance’s discourse in recent years that it is a global, decentralized operation with no headquarters does not sit well with regulators.
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“Four years ago when we started it, we wanted to adopt the decentralized model, so we wanted to have decentralized teams everywhere. But we have a centralized exchange, which is the most important part of our business. Now we have realized that we have to be centralized, “he said, during the interview.
Zhao added that telling regulators that they are not based could easily put Binance in a negative position.
“There are very simple questions that regulators generally ask us. [a] so our answer is a bit funny. Regulators ask us where their headquarters are, and our answer is, well, we don’t have a headquarters. That doesn’t go well with regulators. They don’t know how to work with us. Sometimes they even think that we are obviously unreliable, ”Zhao said.
In recent months, Binance has been hit by regulatory warnings from multiple jurisdictions, including the US, UK, Hong Kong, and European Union countries. But its expanding operations without substantial record of an operational headquarters also left regulators with little control over it.
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“Regulators expect a centralized structure. For the centralized exchange business, we need to be centralized. We need to have a centralized entity behind with clear boundary tables, clear investors, proper board, proper governance, very transparent KYC [conozca a su cliente], AML [anti-lavado de dinero] and risk controls, ”Zhao said.