Binance is in talks with sovereign wealth funds to participate in the world’s largest cryptocurrency exchange to strengthen ties with governments and level off aggressive regulators, the managing director said.

The exchange is facing increasing pressure from regulators this year and believes that investing from sovereign wealth funds would help improve its “perceptions and relationships” with various governments, Changpeng Zhao told the Financial Times in an interview.

“But it can also bind us to certain countries. . . that we want to be a little careful with, ”he added.

Zhao, known as “CZ” who also founded Binance, said his global unit is in preliminary talks to raise capital from several sovereign wealth funds in addition to raising capital for its US subsidiary prior to a public listing. He didn’t want to say which fund the company was in talks with. “The associated ticket size will not be small. . . it won’t be a short process, ”he added.

Valuations of crypto exchanges have skyrocketed in recent months, tracking the growing value of Bitcoin and other cryptocurrencies. Coinbase became the only publicly traded cryptocurrency exchange earlier this year, valued at $ 76 billion, while FTX recently hit a valuation of $ 25 billion in its latest funding round, up from $ 1 billion in February 2020.

Zhao is the largest shareholder in Binance which is profitable. The Singapore business is backed by Vertex Ventures, the venture capital arm of government-backed investment company Temasek.

The crypto entrepreneur said last week at the Bloomberg New Economy Forum that the platform is seeing a daily transaction volume of $ 170 billion, compared to $ 10 billion to $ 30 billion two years ago. Zhao said the revenue run rate is “in billions”.

The attempt to bolster its capital structure comes as Binance steps up its search for a new global headquarters in cities like Singapore and Dubai.

The company offers crypto trading to consumers around the world, but regulators have criticized some of its high-risk financial products, including derivatives trading.

Until recently, Binance kept its founder’s location a secret and insisted that it had no permanent headquarters. The company was founded in China, but pulled out of the country in 2017 after crypto exchanges were banned there and opened a number of offices in other states.

Binance says it has no office or operations in mainland China and only a “small number” of employees work on blockchain technology and other “non-platform” tasks. It claims that there is no other data in China.

China’s ban on crypto mining and transactions is an example of the government’s approach to blocking external technology in favor of a self-developed version, Zhao said. Beijing is heavily promoting its own central bank digital currency.

This method has worked in the internet sector with companies like Alibaba and Tencent, but Zhao said it “may be different” with the free-running crypto industry.

The crypto crackdown in China this year has been accompanied by increased regulatory scrutiny from regulators in Europe, Asia and the UK.

Binance published a letter with basic rights for crypto users last week. The manifest-like bill addressed a number of issues, including user privacy, and also called for more regulation.

There is a perception that exchanges are “crazy” because they don’t have traditional licenses, Zhao said. “I’m a very calm guy. I am not a crazy guy. So we want the regulation in this area to be clearer. “

Even so, regulators, including the UK’s Financial Conduct Authority, say they are unable to properly monitor the business because Binance has declined to provide basic information such as trade names and roles for its global entities. Big banks like Barclays have even stopped some customers from sending funds to Binance.

Zhao said he was not worried about illegal activity on Binance’s platform as the company was “probably better than banks” when it came to controls such as security checks.

Binance has increasingly drawn to governments where the company can communicate “more directly” with regulators like Singapore. Zhao added that he had also spent the past two months meeting supervisory authorities in cities like Dubai, Paris, Qatar and Bahrain.

Most countries don’t have clear guidelines on products, including gamified tokens and non-fungible tokens, he said.


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