Binance Believes that the Recovery of Crypto is More Closely Related to Regulators

06/30/2022By: C, Fiona

The cryptocurrency giant Binance is changing its strategy because it focuses on the less developed industries in Southeast Asia, reversing the “first enter, then follow” approach, which has triggered warnings from the financial authorities in Britain, Japan and Singapore.

Binance, the world’s largest digital asset exchange by volume, signed an agreement with the Cambodian securities and exchange regulatory authority on Thursday to develop a legal framework for the regulation and development of the local digital asset industry. Cryptocurrency, as a way of transaction and an asset class, still has imperfect rules in Southeast Asia.

Before signing the memorandum with Cambodia, French regulators approved a subsidiary of Binance to provide digital asset services in May. France’s approval may help Binance separate itself from other European jurisdictions. Previously, it was prohibited from engaging in regulated financial activities in the UK and was warned by Japan to stop its operations in the country without a license.

Binance: the Current Decline is an Opportunity

Leon Foong, head of Binance Asia-Pacific market, said that the company believes that the current decline in cryptocurrency prices is an opportunity to rebuild the industry with stronger participants. According to CoinDesk, in the past three months, the total market value of cryptocurrencies has shrunk by $1.26 trillion, or 58%, falling below $1trillion for the first time since the bull market began in early 2021.

“Although there are some market correction, this will be a more flexible period. The projects that can survive are those that will exist for a long time,” Foong said. He added: “We hope that regulators will see this resilience so that they can feel reassured and clear about the supervision of this new asset class.”

Foong was interviewed by Nikkei Asia in Bangkok, where he coordinated Binance’s plan to launch the Thai exchange through a joint venture with Gulf Energy Development Corporation.

Gulf and Binance are applying for a digital asset service license for the joint venture. As a senior partner, Gulf will hold 51% of the joint venture announced in April, marking its first entry into the wild west of financial services and cryptocurrency. So far, the Securities and Exchange Commission of Thailand has only issued 8 digital asset licenses.

Strong Local Partner

Foong said,” it is helpful to have a strong local partner who has invested in key strategic infrastructure such as telecommunications and energy, and is interested in future verification of its business model.”

Gulf  is one of the largest private power producers in Thailand and has been diversifying its business by investing in renewable energy and telecommunications. Blockchain advocates believe that this technology is being deployed to manage the distribution of utilities. As people use digital asset tokens to pay water and electricity bills, it opens the door for large-scale adoption.

In the Philippines, widespread adoption may come faster. The growing middle class in the Philippines uses popular blockchain based games, such as Axie Infinity, to reward players with digital tokens and access cryptocurrencies. Foong said that Binance is in the process of obtaining a license from the Philippines. After acquiring shares in HGX, a regulated local exchange, it withdrew its license application in Singapore.

The Bank of Thailand banned the use of cryptocurrency as a means of payment in April, but the government has promoted digital assets as an alternative investment. Binance will have to compete with Bitkub, which handles more than 90% of the transaction volume in Thailand, as well as the tight supply of financial and technical talents.

“We see other players in this field as partners. As long as the ecosystem is growing, Binance will grow,” Foong said.

He added: “we do not believe that in any market with a penetration rate of less than 10% [monopoly is] the correct market classification… Our focus will be on developing the market and educating end users, regulators and existing business leaders on how to apply blockchain to their processes.”

Binance: Expand Global Workforce

Binance hopes to expand its global workforce by 2,000 to less than 10,000, even if its international competitors face a bear market. Just this month, coinbase, which is listed on Nasdaq, announced that it would cut more than 1100 jobs, crypto Com cut jobs by 5%, blockfi cut jobs by 20%.

Foong believes that Binance’s “sustainable and cash positive core exchange business” has enabled it to tide over its recent difficulties. Bitcoin is the cryptocurrency with the largest trading volume. Its price is $20000. With the central banks tightening monetary policy, it has decreased by 44% year-on-year.

Smaller projects are less fortunate. Changpeng Zhao, chief executive of Binance, wrote in his blog last week that the company will carefully review the many requests it has received for assistance or mergers and acquisitions.

“We will not invest in a project just because there is a discount,” Foong told Nikkei Asia.

Although Binance is registered in the Cayman Islands, regulators have been frustrated by the lack of a formal headquarters. Zhao moved to Singapore when he recovered from a serious illness, which led to speculation that Binance would set up a headquarters there. He moved to Dubai at the end of last year, and Dubai enacted its first law to regulate digital assets in February.

Foong said,” wherever Binance goes, the ecosystem goes.”

He added that Binance would adhere to the “multihub” model and set up regional offices in Paris and Dubai.

“We won’t invest in a project just because there’s a discount,” Foong told Nikkei Asia.

The Lack of a Formal Headquarters

Although Binance is registered in the Cayman Islands, regulators have been frustrated by the lack of a formal headquarters. Zhao’s move to Singapore at the start of the pandemic raised speculation that Binance would set up its headquarters there. He relocated at the end of last year to Dubai, which in February enacted its first law regulating digital assets.

“Where Binance goes, the ecosystem goes,” said Foong. Binance would stick with a “multihub” model, he added, with regional offices in Paris and Dubai.