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0 CommentsCZ highlighted examples such as regulatory complexity and capital requirements as reasons why he isn’t keen on Binance buying a bank.
Binance CEO Changpeng Zhao says the firm is unlikely to buy up any banking institutions, despite a growing worry of crypto companies being debanked, including Binance’s own operation in Australia.
The collapse of several U.S. banks this year has prompted concerns that the pool of crypto-friendly banks is shrinking. To name a few of the crypto industry’s former key banking partners, Silvergate, Silicon Valley Bank, and Signature Bank have all capitulated this year.
Meanwhile, Down Under, Binance Australia announced a halt to its Australian dollar services after its payment decided to end support for the exchange. The exchange has still yet to find an alternative provider.
Fellow Binancians,
We regret to inform you that with immediate effect we are unable to facilitate PayID AUD deposits for Binance users due to a decision made by our third party payment service provider. We understand from our third party payment service provider that Bank…
— Binance Australia (@Binance_AUS) May 18, 2023
Appearing on a May 29 episode of the Bankless Podcast, CZ responded to a question from popular Twitter user DegenSpartan, who humorously asked: “Can you please, buy a bank and make it crypto-friendly?”
“Well we did look at that,” CZ said, as he went on to outline the limitations on that train of thought:
“The reality is much more complex than the concept. You buy one bank, it only works in one country, and you still have to deal with the banking regulators of that country. It doesn’t mean you can buy a bank and do whatever you wanna do.”
“If the banking regulators say, ‘look you can’t work with crypto’ then they can take your license away if you do. So buying a bank doesn’t prevent regulators from telling you ‘no you can’t touch crypto’,” he added.
Delving further into the matter, CZ argued that even if Binance bought one bank, it would still need “corresponding banks all over the world and most of the corresponding banks are in the U.S.”
“Then the corresponding banks will tell your bank ‘look if touch crypto, we’re not facilitating your international transactions,” he said.
Another issue is also the cost, argued CZ, as he suggested that Binance would barely make a profit from owning a bank, or network of banks.
“Banks are not cheap. Banks are very expensive for very little business revenue. […] The amount of capital required is quite high, and the regulatory approval for buying a bank is the same or more, as setting up a new bank, which is very onerous,” he said, adding:
“Many banks don’t have very sound business models. They’re very risky businesses. They take the customer’s money, loan it out, try to make money, if they don’t get it back, they declare bankruptcy. In many countries the government will save them, but I don’t like to run those kinds of businesses.”
Ultimately however, CZ stated the Binance may make small minority investments into banks, so that it “hopefully influences them to be more crypto friendly.”
Source: https://cointelegraph.com/news/binance-ceo-cz-wont-buy-bank-despite-crypto-debanking
