In brief
- Changpeng Zhao, Binance CEO, described Coinbase's direct listing as "humongous."
- He said the development provides a very clear playbook for Binance in the future.
Binance and Coinbase are rivals in the cryptocurrency exchange business. But that doesn't mean Binance won't take a page from its competitor's playbook. According to Binance CEO Changpeng "CZ" Zhao, Coinbase’s direct listing on the Nasdaq last month gave other crypto companies a “very clear playbook” for the future.
"Now, in the U.S., in one of the world’s most advanced economies, a cryptocurrency exchange can IPO on the Nasdaq," CZ told Decrypt editor in chief Daniel Roberts during this year’s Ethereal Virtual Summit. "That's humongous."
What’s more, CZ said explicitly that Binance will aim to follow in Coinbase’s footsteps. "If we do everything they do, then there shouldn't be any problems. So now, there's a playbook in the U.S. and I think in the U.S. it's easy to copy. And also outside of the U.S., many countries probably will copy many of the regulations the U.S. adopted."
CZ didn’t clarify exactly what “copying” Coinbase in the U.S. would look like, but he is especially optimistic when he compares his company's trading volume to Coinbase's. “On the day of the Coinbase IPO, Binance US trading volume was 40% of Coinbase’s trading volume,” CZ said, adding, “That percentage has been on the uprise for the past little while.”
On the other hand, every crypto exchange makes claims about its size. FTX.com says it is the biggest exchange in the world outside of China, a claim that raised CZ's eyebrow when relayed to him during the Ethereal interview. Coinbase says it's the biggest exchange in the U.S.
"Everybody wants to claim that they're the biggest exchange," CZ said at Ethereal. "We actually always say Binance is one of the biggest exchanges in the world, we don't say we are the biggest exchange. Depending on how you measure it, there's many different ways to segregate markets. But globally, we are by far, I think, by trading volume, by number of active users, by third party web traffic analysis, by mobile downloads, we're by far the largest in all of those metrics."
Building up Binance in America
CZ has high hopes for Binance US, especially after a key recent hire: former U.S. financial regulator Brian Brooks was recently named Binance US CEO. Brooks previously served as the acting Comptroller of the Currency—his office oversaw the supervision of over 1,000 national banks in the United States.
By having Brooks take over Binance US operations, many crypto folk concluded CZ is gearing up to push for compliance with US regulations.
“We want to show that we take compliance very, very seriously, but we also want to grow the business," CZ said. "I think Brian is one of those very unique individuals that has a very strong compliance background and compliance credibility, but he also understands crypto deeply."
He also pushed back at what he believed to be an unfair assumption—that Binance doesn’t want to abide by U.S. regulations. “Binance is actually the most compliant organization in the world, I think, in the crypto space," he said.
It is important to note here that, historically, Binance has had regulatory issues all over the world. Last year, the Malaysia Securities Commission alleged that Binance was illegally operating within the country.
The US Commodity Trading Futures Commission (CTFC) has also taken aim at Binance, alleging that Binance US allegedly allowed American traders to place trades violating US regulations. Decrypt asked CZ to comment about the CTFC investigation last month, but he declined to do so.