- Changpeng Zhao, CEO of Binance, has revealed the exchange’s plans to move to a centralized headquarters.
- According to Zhao, regulators frequently frown on the exchange’s decentralized operations model.
- In the face of increased scrutiny, the exchange has taken several steps to comply with regulators.
Binance, the world’s largest cryptocurrency exchange, intends to abandon its decentralized operations model in favor of a centralized headquarters.
Binance is relocating to a centralized headquarters.
Binance’s founder and CEO, Changpeng “CZ” Zhao, has revealed the exchange’s plans to establish a centralized headquarters in a specific location.
Binance will abandon its decentralized operations model in order to be more legally compliant, Zhao confirmed in a Wednesday interview.
However, the CEO did not specify where the exchange would be based.
Despite being a centralized business, Binance launched in 2017 and has used a decentralized business model for years. It has a number of locations around the world.
The exchange remained outside the jurisdiction of any single country due to the decentralized model and lack of a fixed headquarters. However, with new plans to operate from a centralized headquarters, full legal registration is likely.
Zhao explained why the exchange has decided to operate from a centralized location:
“Regulators inquire, ‘Where is your headquarters?’ and we respond, ‘Well, we don’t have a headquarters.’ That does not sit well with the regulators. They have no idea how to collaborate with us. They even suspect us of being shady at times.”
Binance previously registered in the Cayman Islands and opened a branch in Malta, but neither jurisdiction granted it a license to operate.
Binance has come under fire from financial regulators all over the world in the last year. Several countries, including the United Kingdom, Poland, Italy, Japan, Malaysia, Singapore, and Thailand, have issued warnings to the exchange for providing trading services without a license. Furthermore, the US Department of Justice and the Internal Revenue Service were said to be looking into the exchange earlier this year.
While operating from an official location exposes the firm to new regulatory requirements, it should also increase the firm’s compliance. Zhao explained how the update will make it easier to work with regulators:
“We need to be centralized for the centralized exchange business. We need a centralized entity with clear investors, proper board governance, extremely transparent KYC/AML procedures, and strong risk controls.”
Binance is demonstrating its commitment to working with regulators by establishing a centralized legal entity. As it has come under fire in recent weeks, the exchange has taken several other steps to comply, including lowering leverage limits, instituting a mandatory KYC process for new users, and hiring a former IRS officer to combat money laundering. The latest move is another step toward satisfying regulators and obtaining the necessary licensing to serve its clients globally.