Binance seeks expansion beyond the crypto sector amid heavy regulatory scrutiny

World's largest cryptocurrency exchange Binance plans to increase investments outside the crypto space as the sector comes under scrutiny.
Cryptocurrency exchange Binance wants to increase investment in non-crypto space. Credit: Marco Verch via Flickr

Key Takeaways

  • Cryptocurrency exchange Binance wants to increase investments outside the crypto space.
  • The exchange continues to face strong scrutiny from global financial watchdogs.

YEREVAN (CoinChapter.com) – Binance, the world’s largest cryptocurrency exchange, is looking to expand into businesses that operate outside the crypto sector. The move comes amid calls for a global crypto regulatory framework due to an increasing illegal activity involving cryptocurrencies and exchanges.

The first signs of diversification came last month when Binance announced plans to invest $200 million in leading media outlet Forbes. The investment came via Binance Capital Management, the exchange’s official investment vehicle registered in the British Virgin Islands, that had it secure two seats on the Forbes Board of Directors for executives appointed by the exchange.

Interestingly, Binance had sued Forbes in 2020 when the media house accused it of intentionally evading U.S. regulations. However, the exchange later dropped its case against Forbes.

Changpeng Zhao, Chief Executive Officer of Binance, informed of expansion plans in an interview.

“We want to identify and invest in one or two targets in every economic sector and try to bring them into crypto,” 

FT quoted Zhao saying.

According to Zhao, the entry of even a single company in any sector in the crypto will increase competition, forcing others from the sector to follow suit. 

Recommended: Crypto exchange Binance has another regulatory monster to fight: the U.S. SEC

Binance continues to be under scrutiny

Binance faces global scrutiny over its alleged role in facilitating money laundering and insider trading. Hong Kong, Malta, the U.K., the U.S., Lithuania, and India are some countries that have taken a closer look at Binance’s functioning as a crypto exchange.

Earlier this month, Binance partnered with Eqonex, a crypto exchange with a NASDAQ listing. The partnership deal reportedly gave Binance control over the exchange. 

Following the deal, Eqonex announced it had joined hands with Binance’s affiliate Bifinity to help accelerate mass crypto adoption.

The partnership gives Bifinity the right to appoint the Chief Executive Officer, Chief Financial Officer, and Chief Legal Office of EQONEX. 

The latest developments have received strong criticism from the U.K.’s Financial Conduct Authority (FCA). The watchdog even warned to cancel or suspend the registration of Binance on grounds such as non-compliance with Money Laundering (AML) Regulations.

Moreover, last month’s partnership between the exchange and retail payment processor PaySafe did not sit well with the FCA.

Binance continues to dominate the cryptocurrency exchange landscape.
Binance continues to dominate the cryptocurrency exchange landscape. Credit: The Block

However, despite the global crackdown, Binance dominates the cryptocurrency exchange landscape. For instance, the company’s market share has risen from less than 43% in 2018 to over 70% as of March 2022.

With diversification now inevitable, Binance’s revenue and influence will continue to grow across sectors. On the flip side, however, regulators will also keep a closer watch on the exchange both in the crypto space and outside it.

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Binance, Binance seeks expansion beyond the crypto sector amid heavy regulatory scrutiny

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