Changpeng Zhao, head of Binance, talks with sovereign wealth funds
The world's largest cryptocurrency exchange, Binance, is negotiating with sovereign wealth funds to attract investments in an attempt to improve relations with state authorities and smooth out aggressive regulatory policies. Changpeng Zhao, the head of the company, told the Financial Times in an interview. The company is facing increasing pressure from authorities this year and is finding that the funds' investments can improve its image in the eyes of various governments and appease them, Zhao pointed out. "However, it will also link us to specific countries, and in this respect we would like to be careful," the Binance chief said.
Zhao also said that the organization is in preliminary talks to raise capital from several sovereign wealth funds, but he did not specify which ones he was referring to, adding that the process will not be quick.
Binance made the decision amid a search for headquarters in cities such as Singapore and Dubai. The company provides services to consumers around the world, but has faced criticism from regulators because of its high-risk financial products, including derivatives trading. Until recently, Binance hid where its founder was located and insisted it had no permanent headquarters. It was established in China, but left the country in 2017 after a ban on cryptocurrency exchanges and set up a number of offices in different cities. According to Zhao, China's ban on cryptocurrency mining shows the government's intention to create barriers to technologies that compete with its own: Beijing actively promotes its central bank's digital currency. On September 24, the People's Bank of China (the equivalent of the Central Bank) banned any activity related to cryptocurrencies. After that, Binance, as well as other major exchanges, excluded registration of Chinese users. The company said the app is not available for download in the country. "Binance takes its obligations very seriously and strives to follow the requirements of local regulators wherever we operate," a company spokesperson said. The exchange is facing pressure from financial regulators around the world amid their concerns about weak user protections as well as the use of cryptocurrency for money laundering. Amid demands from various states, the exchange announced in August the adoption of stricter user verification rules, under which new customers will not be able to access the products and services of the trading platform without proof of identity.
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