Binance Comes Full Circle

Since it launched in summer 2017, Binance, the world’s biggest cryptocurrency exchange, has kept regulators at arm’s length. Now, it’s thinking of giving them a big ol’ bear hug as it starts to dabble in more facets of the financial system.

Binance has been a bit of a freewheeler

CEO Changpeng Zhao (aka CZ) made a name for Binance by avoiding the traditional banking system’s regulatory standards.

Instead, Binance’s bread and butter has been crypto-to-crypto trading. Since it doesn’t support trading digital assets for fiat currencies, the exchange has skirted the regulation that comes with government-issued money—freeing it to operate in all but 15 countries.

This isn’t the only way to do business. If Binance is cutting 6th period to get a Slurpee at 7-Eleven, its rival exchange Coinbase is presiding over a meeting of the Crypto Exchange Club. Coinbase is available in 42 countries and is a licensed money transmitter in a little over half of U.S. states, meaning it can complete fiat-crypto trades.

Crypto-to-crypto has been good to Binance...The exchange has shown “unbelievable brilliance,” CoinDesk writes, by using its freedom from regulators to list assets and launch services that Coinbase couldn’t touch.

But exchanges change

As it expands into new business ventures, Binance wants to get more compliant, Fortune reports. It said last week it’s hiring CipherTrace, which helps companies (and law enforcement) sniff out sketchy crypto trading, fraudulent activity, and money laundering.

And this month, Binance is launching a fiat-to-crypto exchange in Singapore, where it will try to play nice with the city-state’s financial regulators. In September, CZ said he wanted to establish fiat-to-crypto trading on almost every continent—which means dealing with regulators across many jurisdictions.

Big picture: For nearly two years, Binance stayed in its crypto-to-crypto lane, staking growth on seasoned traders who weathered the bear market. It gained market share from compliance-focused Coinbase, but now Binance is ready to stage another coup as institutional buyers weigh crypto strategies.