Pinning down Binance, the world’s biggest cryptocurrency exchange, is a tricky business. It has had no headquarters. This is no accident. Such ties tend to bring regulatory requirements and the risk of watchdogs calling if things go wrong. The UK’s financial regulator concluded Binance’s failure to respond to basic queries was a reason why it was impossible to oversee.
If we are to believe Binance, its peripatetic stance is about to change, as is its truculent attitude to regulation. It is poised to announce its global headquarters. Its chief executive, Changpeng “CZ” Zhao, is in discussions with watchdogs from Singapore to France to Dubai — where he has just become a homeowner. The company also recently published a manifesto stating that regulation was “inevitable”. This is ostensibly a welcome change from six months ago, when Binance met the scrutiny of regulators around the world largely with a shrug. As part of Binance’s attempted rapprochement (which also involves a new head of communications), Zhao claims that Binance is courting big-ticket investment from sovereign wealth funds.
Unpicking bravado from reality in the cryptosphere is hard. Binance is coy about which SWFs are on its dance card, and has provided no detail on how far along any discussions are, nor the nature of investment. Healthy scepticism is required. But on the face of it, as sophisticated investors, SWFs may force a transparency on Binance that has so far remained elusive.