Binance CEO Changpeng Zhao said the company is unlikely to buy any banking institutions, despite growing concerns that cryptocurrency companies are being deprived of banking business, including Binance's Australian operations.
The collapse of several US banks this year has raised concerns that the number of crypto-friendly banks is shrinking. Former major banking partners Silvergate, Silicon Valley Bank and Signature Bank have all capitulated this year. Meanwhile, Binance Aust Ralia announced the discontinuation of its Australian dollar service after its payment provider decided to end support for the exchange. The exchange has yet to find an alternative provider. On the May 29 episode of the Bankless Podcast, CZ answered a question from popular Twitter user DegenSpartan, who humorously asked, "Can you buy a bank and make it crypto-friendly?"
"Well, we did," CZ said, before outlining the limitations of this line of thinking: "The reality is much more complicated than the concept. You buy a bank and it only works in one country and you have to deal with the banking regulator in that country. It doesn't mean you can buy a bank and do whatever you want thing." "If the banking regulator says, 'Look, you can't use encryption,' then they can revoke your license if you do . So acquiring a bank doesn't stop the regulator from telling you 'No, you can't touch cryptocurrencies'," he added.
CZ dug further into the matter, arguing that even if Binance acquires a bank, it still needs “corresponding banks all over the world, and most of them are in the US.” “Then the appropriate bank will tell your bank 'look if you 're exposed to cryptocurrencies, we're not going to facilitate your international transactions,'” he said.
Another issue, according to CZ, is cost, as he believes Binance will hardly profit from owning a bank or a network of banks. “Banks are not cheap. Banks have very little revenue and very high costs. The amount of capital required is quite high, and the regulatory approvals to buy a bank are the same or more than to set up a new bank, which is very onerous,” he said, and added:
"A lot of banks don't have a very sound business model. They're very risky businesses. They take money from customers, lend it out, figure out how to make money, and if they don't come back, they declare bankruptcy. In many countries, the government will bail them out, but II don't like running this type of business.” Ultimately, however, CZ said that Binance may make small minority investments in banks, which “hopefully influence them to be more crypto-friendly.”
