Cryptocurrency exchange Binance is to restructure itself around a single centralised business, after regulators voiced concerns that they could not effectively oversee the company due to its lack of transparency.
The world’s largest crypto exchange has found itself in hot water with global watchdogs over a lack of clarity on how the business is structured across its different offices, executives and investors, among other issues.
Binance is incorporated in the Cayman Islands but operates via a network of different offices scattered across the globe, with no clearly defined headquarters.
It has previously refused to answer questions from watchdogs on where its various operations are held, who its major stakeholders are, and the legal and regulatory status of products it offers, according to a notice published by the UK’s Financial Conduct Authority in August.
Changpeng ‘CZ’ Zhao, Binance’s chief executive, said the business will need to restructure itself around a centralised entity if it is to assuage regulatory concerns.
“As we run a centralised exchange, we have come to realise that we need to have a centralised entity to work well with regulators,” Zhao said in a 16 September interview with the South China Morning Post. “We need to have clear records of stakeholders’ ownership, transparency and risk controls.”
A Binance spokesperson was contacted for further comment.
It comes after the FCA said last month that it is “not capable” of supervising Binance, because the exchange refused or was unable to respond to questions or provide information about its activities to the regulator.
The FCA banned Binance’s UK entity, Binance Markets Limited, from operating in the country in June, joining a chorus of regulators in Japan, Hong Kong, Italy and elsewhere making similar decisions.
Binance’s global website was also recently placed on an investor alert list by the Singaporean financial regulator, though its local subsidiary is permitted to continue operating while its application for a payment services licence is assessed.
The firm has also faced warnings from regulators over its offering of regulated products without proper authorisation, such as crypto-linked derivatives and digital stock tokens. In July, Binance said it would wind down its derivatives business in some European countries following the crackdown.
Zhao previously said the business plans to ramp up hiring in its compliance division, as part of a strategy to alleviate regulatory concerns.
It appointed former Ant Group and Uber executive Brian Shroder as the new president of its US business earlier this month, providing some stability to the firm’s operations after the departure of its previous US CEO only four months into the job.
To contact the author of this story with feedback or news, email Emily Nicolle