Binance to abandon decentralized HQ concept after some regulators think it’s ‘dodgy’
Crypto exchange Binance is poised to shift away from its long-standing “decentralized headquarters” narrative as it faces global regulatory headwinds.
In a TV interview with the South China Morning Post on Thursday, Binance co-founder and CEO Changpeng Zhao was asked how Binance is getting itself ready to apply for licenses in jurisdictions that have clearer licensing regimes.
In response, Zhao acknowledged that Binance’s pitch over the past several years that it is a global, decentralized operation with no headquarters does not go down well with regulators.
“Four years ago when we started it, we wanted to embrace the decentralized model so we wanted to have decentralized teams everywhere. But we do run one centralized exchange, which is the biggest part of our business. Now we have come to realize that for the regulators, we need to be centralized,” he said, during the interview.
Zhao added that telling regulators they have no headquarters could easily put Binance in a negative light.
“There are very simple questions regulators usually ask us [to] which our response is kinda funny. The regulators ask us where’s your headquarters, and our responses is, well, we don’t have headquarters. That doesn’t go well with regulators. They don’t know how to work with us. Sometimes they even think we are dodgy obviously,” Zhao said.
Over the past several months, Binance has been hit by regulatory warnings from multiple jurisdictions including the U.S., U.K., Hong Kong and countries in the European Union. But its sprawling operations with no substantial record of an operational headquarters also left regulators with little control over it.
“Regulators expect a centralized structure where it is set up. For the centralized exchange business, we need to be centralized. We need to have a centralized entity behind it with clear cap tables, clear investors, proper board, proper governance, very transparent KYC [know your customer], AML [anti-money laundering] and risk controls,” Zhao said.
Source: The Block