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Binance, the world’s largest digital currency exchange by trading volume, is in talks with global sovereign wealth funds for equity financing.
The revelation was made known by the Binance Founder and Chief Executive Officer, Changpeng Zhao, known popularly as “CZ,” in an interview with the Financial Times. CZ refused to name the Sovereign wealth funds the exchange has engaged with thus far, noting that the discussions are still in the preliminary stages and that it’s too early to give full disclosures.
The primary underlying factor for the proposed sovereign wealth fund equity investments is to improve the relationship and acceptability with regulators around the world. Should sovereign wealth funds inject capital into Binance, the notion is that the trading platform will gain additional recognition and credibility with market regulators worldwide.
Binance has been in the crosshairs with many financial market watchdogs this year as authorities from Hong Kong, Germany, Italy, Malaysia, South Africa, and Singapore amongst others have published warnings against the exchange’s legal status on their borders. While it plans to ride on the good standing of many sovereign wealth funds across various jurisdictions, CZ said he is cautious about being tied to just one country.
“But it may also tie us to specific countries, which we want to be slightly careful with,” the CEO noted.
Despite the caution not to release the names of the Sovereign Wealth Funds it is in talks with, CZ confirmed that “The ticket size involved will not be small. It won’t be a short process.”
Binance and Sovereign Wealth Fund: One in Many Options to Align With Regulators
Prior to this time, Changpeng Zhao has often expressed the fact that Binance is a profitable entity, with no immediate plans to go public. The discussions with Sovereign Wealth Funds as confirmed by the CEO are notably in a bid to push the boundaries of its allowance in order to align with regulators.
With the series of crackdowns the firm has experienced thus far this year, it has given in to so many concessions as the trading platform has taken action to suspend some of its trading activities in a number of jurisdictions. Against its core tenets of decentralization, Binance is now also on the lookout for a suitable region to situate its central headquarters, as it looks to operate close to a number of regional governments.
Despite its regulatory woes, Binance has grown remarkably since its inception. CZ told the Financial Times that the exchange grew its daily transaction volumes surged up to $170 billion in November 2021 from just $10 billion to $30 billion two years ago. The exchange’s affiliate, Binance.US is also looking to complete pre-IPO funding early next year in which it plans to raise a “couple hundred million dollars” as the exchange looks to bolster its business position across the board.