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The winds of change are blowing in the world of cryptocurrencies. The long, cold winter that began in May 2022 and wiped out more than $2 billion in capital in the industry appears to be coming to an end. The biggest expression of this change is that the scandals of companies in the industry no longer have an impact on the price of Bitcoin, which at the beginning of the year is above $ 40,000, a level that it has not reached in the last 20 months. US regulators’ complaints against Binance, the world’s most used platform for buying and selling digital assets, and the departure of its founder and CEO Changpeng Zhao in November hardly shook the market.
“The industry has changed drastically, but users continue to trust us,” Richard Teng (Singapore, 53 years old), the new CEO of Binance, tells CincoDías. The person responsible for taking the reins of this behemoth, which has 167 million registered users in nearly 50 countries, has the difficult task of balancing highlighting the company’s achievements in its short (but controversial) existence of six Years and turning the page The turmoil and scandals are preparing the company for the hoped-for accelerated adoption of cryptocurrencies in a regulated environment.
The controversy is not small. On November 21, the company pleaded guilty to violating anti-money laundering regulations in providing services to its US customers. The company agreed to pay more than 3.8 billion euros in fines and appoint a supervisor over the company’s activities, while Zhao left the company he founded. The company still faces an individual lawsuit from the North American Securities and Exchange Commission (SEC).
“We made mistakes. When we launched in 2017, compliance was inadequate in some areas. We recognize these facts as part of the resolution and proceed from them,” he said in an interview with this newspaper, in his only interview with a Spanish media. To distinguish it from other famous cases, notably that of FTX founder Sam Bankman-Fried, Teng emphasizes that US regulators have not found any cases of fraud in the use of his clients’ assets. Additionally, he points out that unlike other cases such as the Moon stablecoin, users were able to withdraw all of their investments from the platform at any time.
We made mistakes. When we started in 2017, regulatory oversight was inadequate in some areas. We acknowledge these facts as part of the resolution and move forward from there
Richard Teng, CEO of Binace
Teng also faces the challenge of abandoning the messianic style that has previously dominated the industry’s major players. “CZ was a very inspiring founder who did many things for the industry,” he clarifies, although he hesitates for a moment about which verb form to use. The profiles of both managers couldn’t be more different. While the former CEO moved like a major celebrity, a guru on par with other industry icons, Teng favors humility and a speech clearly modulated by his communications team. With constant references to the employees who help him maintain the company and his regulatory sector experience gained in Abu Dhabi and Singapore before joining Binance in 2021, he makes it clear that the narrative will not be the same becomes.
The change in the sector’s discourse is so radical that it is no longer aimed at angering traditional financial institutions, with which Binance competes by offering payment services, paid deposits and investments. “We need acceptance by institutions. “This guarantees us new research, more investments, fresh products and more liquidity,” emphasizes Teng, but also sees the presence of large banks and fund managers such as BlackRock and Fidelity in the industry as advantageous. The expectation of an imminent approval of the first Bitcoin exchange-traded fund (ETF), which the international press expects in January 2024, excites the manager, who believes that it will be “a pure win for the industry”. The United Kingdom banned Binance from operating in the country in 2021 on the grounds that the company was conducting activities without appropriate regulatory approval.
The traditional, defiant discourse is only maintained in relation to the traditional press, which he targets with his reporting on money laundering: “The media chooses to report on a single aspect.” In doing so, according to the Binance boss, forgetting that “blockchain is a traceable technology” and that the company “receives more than 50,000 cooperation requests from authorities every year.” Its central mission, “supporting monetary freedom,” is undoubtedly linked to the future of regulation.
A new sector
In diagnosing what was happening, Teng is aware that the company was walking a fine line and its survival was at stake. “In the first few days following the news, there was a net outflow of funds from the Binance platform. However, that has changed: we are seeing very strong net inflows so far and our user base continues to grow,” he claims.
We have seen very strong net inflows so far and our user base continues to grow
Richard Teng, CEO of Binance
The data proves that this is not just a peculiarity of Binance. The sector has seen 11 consecutive weeks of inflows since October, with $3.6 billion worth of digital currency exchanges taking place in the previous week, according to data from CoinShares. According to consulting firm CCData, trading volume on Binance has also increased every month since September, although market share has fallen by 20 percentage points since the beginning of the year.
Teng repeats like a mantra that “users trust us” despite the difficulties encountered. The reasons for this are that the exchange has always remained true to its commitment to users and that its customers have always been able to withdraw their savings without any problems. And it differentiates itself from the decline of other major players in the industry, which it does not name, by emphasizing that its corporate structure “remains debt-free” while posting profits and keeping expenses low.
One of the first controversies for Teng’s leadership was his refusal to reveal the location of Binance’s global headquarters, and he stands by Zhao’s policy in this regard. In Spain, the local subsidiary, which operated under the name Moon Tech Spain, is registered in the heart of the Salamanca district, in a building shared by apartments and a coworking space. “We are a global company with global activities. In Europe, our regional headquarters are in France and if we have something to announce, we will do it,” he simply explains.
The company’s character and global ambitions are both a weakness and a strength. Teng points out that Binance is regulated in 18 different jurisdictions, each of which is more or less heavily regulated. “The different regulations make it difficult for companies like ours. The rules contradict each other,” he comments. The expectation, he reiterates, is that “over time the sector will move towards harmonization of international standards” to facilitate the operations of global companies.
In Spain, the company has been registered as a service provider with the Bank of Spain since last year. However, this does not mean that the Bank of Spain approves or monitors its operations, which reach customer deposits worth 182.7 million euros; simply that the authority checks whether the requirements for preventing money laundering and terrorist financing are met.
As for the rest of Europe, while avoiding the direct mention of data from Spain, it celebrates the adoption of the new European Regulation on Cryptocurrencies (MiCA), which will allow it to bypass the permission of all twenty-seven and use a single ” Community passport”. This would make it possible to avoid new problems such as those encountered in the middle of the year, which forced it to suspend its activities in the Netherlands and Cyprus and to withdraw its license applications in Germany and Austria.
Although the community standard will not come into force until the end of 2025, the company wants to prepare for it. Teng insists that the platform has invested nearly $400 million in its compliance program over the past two years with the aim of staying ahead of all other players. However, other voices in the industry warn that higher spending does not equate to more effective measures.
In a sector characterized by speculation and volatility, Teng is cautious and avoids any kind of prediction about what might happen to the prices of major digital currencies. The recipe for securing Binance’s future, as the manager assures without a doubt, is to “enlarge the pie.” “We have been focused on building a vibrant ecosystem and increasing cryptocurrency adoption, from just 5% to 20%.” And here he restores the user centrality that he believes has been the key to the company’s strength.
The question remains whether Binance will be able to navigate an industry in complete change without falling into nostalgia. As Zhao moves away from the company he founded and awaits the decision of the American judiciary, the company must invent a new manual, far from major events and controversies at the pace of Twitter. “I am very optimistic,” Teng concludes the conversation. The stock market’s preponderance also gives it another responsibility: it is also up to it to establish a new business model for the crypto world.
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