Binance CEO Changpeng Zhao, popularly known as CZ, has dismissed the idea of the cryptocurrency exchange acquiring banking institutions amidst concerns over the de-banking of crypto companies.
Despite growing worries and Binance Australia’s recent operational challenges, CZ made it clear that buying a bank is not in their immediate plans.
The recent collapse of several U.S. banks has ignited concerns about the shrinking pool of crypto-friendly financial institutions.
Previously reliable partners of the crypto industry, including Silvergate, Silicon Valley Bank, and Signature Bank, have all withdrawn support this year.
Binance Australia faced its own setback when its payment provider ceased its Australian dollar services, leaving the exchange searching for an alternative solution.
During a recent appearance on the Bankless Podcast, CZ addressed a tweet from a user suggesting Binance should buy a bank to make it crypto-friendly.
CZ explained the complexities involved, highlighting that buying a bank only solves the issue within one country and still requires compliance with local banking regulations. If regulators prohibit working with crypto, they have the power to revoke the bank’s license.
CZ further emphasized the necessity of corresponding banks worldwide, with many located in the United States. These corresponding banks may refuse to facilitate international transactions if Binance were involved in crypto.
Apart from the logistical challenges, CZ also pointed out the high costs and minimal profit potential of owning a bank or network of banks. He expressed concerns over their risky nature, as banks rely on customer deposits and loans to generate income, which could lead to bankruptcy in certain cases.
However, CZ did mention that Binance might consider making small minority investments in banks to encourage them to adopt a more crypto-friendly stance.
Also Read: Binance Launches Regulated Crypto Trading Platform in Japan
In summary, while the idea of Binance buying a bank might seem appealing on the surface, CZ emphasized the complexities, regulatory limitations, high costs, and inherent risks associated with such a venture.
