CZ Lists Reasons Why Binance Decided Not to Buy a Bank

Following increased regulatory actions from the Securities and Exchange Commission (SEC) and other domestic and global regulators, members of the crypto community have been concerned about the industry’s future relationship with the banking sector.

Focusing on Europe is in the cards

Concern surrounding crypto regulation in the future has been amplified after the collapse of both Signature Bank and Silvergate Bank, both of which provided much of the infrastructure needed to keep the crypto world tied to the banking sector.

To make matters worse, the SEC’s refusal to respond to requests for information from Coinbase and others signals to crypto platforms willing to cooperate that clear regulatory agreements with US institutions reached in good faith may be a long way off.

Some companies — such as Gemini, which recently announced an EU headquarters in Ireland — have decided to look towards Europe instead.

Binance thinks outside the box

Binance does not operate within the United States. In order to provide the service to US clients, Binance.US was launched. Although the two platforms share the same name, Binance.US has a different organizational structure and does not report to CZ or other members of the global company’s C-suite.

For several months now, Binance has been searching for solutions to the weak relationship that cryptocurrency currently has with the banking sector, especially after the recent disputes with Australian banks and monetary service providers.

Binancians Fellowship,

We regret to inform you that we are immediately unable to facilitate PayID AUD deposits for Binance users due to a decision made by our third party payment service provider. We understand from the third party payment service provider that the bank …

– Binance Australia (Binance_AUS) May 18, 2023

In an interview conducted on Bankless PodcastCZ stated that he and his team briefly floated the idea of ​​buying a bank outright in order to solve these kinds of problems without relying on others. However, they eventually decided against it.

According to the exec, the problems faced by cryptocurrency platforms will not be solved by simply buying a bank. Even if a bank was purchased in the United States, this would not guarantee regulatory approval in other regions.

Moreover, the costs involved in buying and operating a bank may be unfeasible because regulators could simply ban a bank from dealing in cryptocurrency anyway.

“Banks are not cheap. Banks are too expensive for very little business revenue. (…) The amount of capital required is very high, the regulatory approval to buy a bank is the same or more than to set up a new bank, and it is very stressful if the banking regulators say, “Look, you can’t do business with crypto, then they can take your license if So buying a bank doesn’t stop regulators from telling you, “No, you can’t touch cryptocurrency. Even then, we’re going to need corresponding banks all over the world.”

However, CZ stated that he and his company were still considering making smaller investments in the banking sector, even if buying a banking institution outright was completely off the table.