CZ of Binance Surfaces Potential IPO for Binance.US Platform

Binance.US is taking the same path as Coinbase as its founder Changpeng Zhao ‘CZ’ says the U.S. based entity is eyeing an Initial Public Offering (IPO).

By
Chung Yee
on
July 25, 2021
Category:
BSC News

The IPO Route

Changpeng Zhao, better known as CZ, disclosed plans to list its U.S.-based entity on the public stock exchange. Taking a similar route as Coinbase, the first crypto exchange listed on the Nasdaq, Binance.US aims to be a significant player in the finance sector.

The Chief Executive Officer (CEO) of Binance said this on Friday, July 23, in an event titled ‘Redefine Tomorrow 2021’ organized by SCB 10X––Siam Commercial Bank’s (SCB) digital technology venture arm. 

This plan was a surprise to many as the recent regulatory clampdowns on Binance in notable jurisdictions have adversely affected its operations. 

“Our partner in the U.S. is looking at the potential IPO route. Most regulators are familiar with a certain pattern, or having headquarters, having corporate structure. But we are setting up those structures to make it easier for an IPO to happen,” CZ said in the talk. 
Source

CZ also addressed the regulatory concerns by assuring that Binance is taking aggressive measures to meet the regulators’ demands. The Initial Public Offering (IPO) route is an exciting proposition to the crypto and non-crypto community that calms regulatory fears.

An IPO would mean that if an investor wishes to be exposed to the expanding crypto industry without directly purchasing crypto assets. They could invest through a more traditional method of buying shares in a publicly traded company is available. 

The American version of the company, Binance.US, was launched in 2019 after Binance was banned from onboarding U.S.-based users. Binance.US is a separate legal entity from Binance but receives branding support and the license to use the technology from Binance, an entity incorporated in Malta. 


Why Binance.US and not Binance?

CZ also explained that for the time being, Binance is not looking at an IPO for itself. Binance will have to change its company structure. Binance will have to bring itself within a particular jurisdiction.

That would mean Binance has to be physically present in that jurisdiction by having its headquarters, office and it also has to be incorporated in that jurisdiction. 

If this happens, it will be a major shift from the position that CZ took in his fireside chat with Laura Shin in Ethereal Virtual Summit 2020.  Without dismissing the possibility of Binance eyeing an IPO in the future, CZ alluded to the fact that the structure has to be in place first. 

The crypto space is becoming increasingly regulated as it gains wider adoption. This is a natural reaction by regulators because any unregulated activity will pose a greater risk of harm to the investors and economy of the country. 

Source: Binance.US is eyeing an IPO 

Binance started as a technology startup focussing on crypto assets and blockchain technology. Crypto has evolved into a financial asset, forcing Binance to pivot itself to operate as a financial services company. 


Communicating with Regulators

Binance has on numerous occasions announced that it would step up compliance efforts in response to scrutiny. Government financial watchdogs in the U.S., U.K., Japan, Italy, and Thailand are among the countries that have either issued warnings or taken action against the exchange for operating in a regulated market without permission. 

The CEO acknowledged that communicating with regulators is currently not one of Binance’s core strengths, but change is coming. Zhao said that Binance would hire more individuals to oversee compliance requirements as well as ex-regulators to improve communication with the authorities. 

Announcing his plans to step down as the chief of Binance early this year, CZ also states that the new Binance CEO will have a “solid regulatory background.”

Binance.US, in its efforts to comply with the U.S. regulatory framework, took the same initiative by appointing Brian Brooks, a former Acting Comptroller of the Currency (OCC).  

Source: Brian Brooks, the former Acting Comptroller of the Currency (OCC), heads the Binance.US

Going Public 

Public listed companies are subject to a stricter regime of compliance. Going for public listing will bolster public confidence. Coinbase has led the way forward.

More companies in the crypto space will be eyeing their own IPO. It is healthy progress as crypto increases in adoption and has become mainstream.  

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Chung Yee

Chung Yee has a legal background and has been involved in research works for the legal and compliance industry. Writing is his passion, centered on topics such as the blockchain and finance. His largest crypto holdings are Solana, Ethereum, and BNB Token.

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