Binance charms sovereign wealth funds with a stake in $300B business


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TL;DR Breakdown

  • Binance, the giant crypto exchange, is tapping into sovereign wealth funds.
  • The move is part of the platform’s charm offensive targeting different governments.

The world’s largest digital assets exchange Binance has been courting sovereign wealth funds (SWFs). Its chief executive Changpeng Zhao (CZ), has said in an interview with the financial times.

According to CZ, the talks target two ends. First, Binance seeks to convince the SWFs to invest in its $300 billion business. Secondly, the firm, through the SWFs, is targeting improved relationships with global governments.

Recently the firm has had run-ins with different governments. So Binance hopes its charm offensive will change the negative perception it faces. In so doing, the firm targets healthier relationships with governments where it operates.

CZ has expressed optimism about the way the talks are progressing. He’s also hinted at the way they’re approaching the talks with caution. That’s because the firm doesn’t want to appear tied to specific nations only.

The CEO affirmed that the talks were still in their initial stages. Again, they were happening at a time its US subsidiary was raising its capital too. That’s in preparation for going public. However, he remained mum on who the SWFs are.

But he left no doubt regarding the magnitude of capital involved. He suggested the talks involved a big-ticket size, implying a significant capital injection. Besides, he anticipates they’ll take a while.

Breaking the Binance-Sino ties

Binance’s move isn’t the first charm offensive it has carried out against a state agency. One of its key partners for its Singaporean concern is Vertex Ventures (VV). VV is the investment arm of Temasek, an investment vehicle for the Singapore government.

Further, the firm is building its financial muscle when it’s looking to locate its global headquarters (HQ). Among the locations that top this list is Dubai. Another is Singapore.

Although it has Chinese roots, the firm exited the country in 2017. That move was in response to Beijing cracking down on exchanges and the crypto sector in general.

Since then, it has skirted the question of its HQ’s location. Similarly, it has remained tight-lipped on CZ’s station. But it has expanded to have strategic offices around the globe.

The firm claims that it no longer operates from inside China. Its only presence there is a thin staff involved in blockchain tech. Moreover, it doesn’t store its data within the country.

China’s crypto crackdown has influenced Binance’s decision. Coupled with rising suspicions in other nations, the firm had little choice but to adapt.

Binance welcomes regulation

It has done so by publishing to its users’ communication it christened a letter of fundamental rights. The letter dwelt on a myriad of issues. In addition to addressing user privacy concerns, it also championed heightened regulation of the space.

CZ holds that he and Binance aren’t crazy. That’s the perception out there owing to less regulation within the crypto-verse. He said that they’re pushing for regulation in the space so long as it’s clear.

Again, he said he was unfazed by illegal transactions on his platform. To him, they had better checks and balances compared to banks. He points to KYC and AML regulations that Binance has to conform to owing to its strict scrutiny.

That said, the firm has scarcely endeared itself to regulators. UK’s Financial Conduct Authority, for example, cries about its inability to supervise the firm fully. That’s because they say Binance hasn’t been forthright in sharing information.

That information includes the names of the trading parties and details of their transactions. Other financial institutions have pulled the plug on Binance transactions. One such institution is Barclays Bank PLC.

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Edith Muthoni

Edith is an investment writer, trader, and personal finance coach specializing in investments advice around the fintech niche. Her fields of expertise include stocks, cryptocurrencies, blockchain, and cryptocurrency investments.

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