In May of last year, when the CEO of the world's largest crypto exchange was asked where his company is headquartered, Changpeng Zhao's, or CZ for short, answer was that Binance has no headquarters—it's a decentralized company, in keeping with the decentralized ethos of the crypto industry.
He also challenged the definition of a headquarters: "Is that an office where people sit? I worked from home for the last three and a half years. Our leadership team are not sitting in one office, we don't have a clear place where we can go by most people's normal definitions of a headquarters that we can call a headquarters."
A little over one year later, CZ's answer to the question has changed. He still can't say where Binance is headquartered, but he says the answer is coming soon.
"We have a global holding company, a global holding entity for the centralized exchange," he said on the latest episode of Decrypt's gm podcast.
So, where is it? "We haven't announced it yet," he said with a laugh. "We will announce that in due time. But it's very simple. It's not that complicated."
It is CZ who made it complicated. Binance is five years old, and spent much of its short history clashing with regulators all over the world even as it grew enormous. In its first few years, the company was at different times reportedly based in China, Japan, Taiwan, and Malta.
In 2017, it registered in the Cayman Islands. In 2019, it also registered in the Seychelles. But by 2020, authorities began calling attention to the company's lack of licenses: Malta issued a statement saying Binance is not licensed to operate there. Malaysia followed suit, saying Binance was operating illegally in the country.
Now CZ has shifted his approach, which he acknowledges wasn't working with regulators.
"We did capitulate," he told Decrypt. "When we started five years ago, there was very little regulatory framework. And in fact, most of the regulators we spoke to... they told us, 'We don't regulate this industry, you're off, we're not involved.' So back in those days, we were embracing the decentralized philosophy, and it worked really well for us."
Now, as the industry has matured, regulators aren't saying "you're off." Now, their first question is: Where's your headquarters? "And we said, look, if we want this, what's the best way forward... as a centralized business, as a centralized exchange? The best way is to give them that structure. So we set up local offices, local entities, hired local compliance, legal, this whole structure."
During the pandemic, Binance has opened up offices in cities like Abu Dhabi, Bahrain, Dubai, and Paris, a list CZ rattles off with pride. "When people ask about our headquarters... We have the structure set up now. So now we satisfy both sides."
Of course, that's still not an answer to the headquarters question. Lots of large companies have offices all over the world; they still also keep one single address. What does CZ say when a regulator asks him where the company is based? "Well, if we're in France, we say 'Look, right here in Paris,'" he said. "If we're talking about the Middle East, it's Bahrain and Dubai and Abu Dhabi. So now people can go to their nearest office, and if they have an issue, they can find us, they can talk to us."
That may sound like just more deflecting, but for CZ it represents real progress. He also boasts that Binance US, the company's separate entity in the States launched three years ago, has obtained money transmitter licenses in 46 states—a thorny process since every state makes different demands. (New York, Vermont, Texas, and Hawaii are the holdouts as of July 10.)
Along with his effort to play nice with regulators, CZ is sounding more like a politician—perhaps taking a page from his rival Sam Bankman-Fried, the FTX founder who has made so many trips to Washington (even after moving his company to The Bahamas) to lobby on behalf of the industry.
CZ is hesitant to say the U.S. has any stricter crypto regulations than anyone else—even as other industry leaders rail about the cold shoulder from SEC Chair Gary Gensler.
"I don't think the U.S. is behind," CZ said. "The U.S. is more strict on yield-generating products, interest-generating products, futures, et cetera. Different countries are a little bit different... The U.S. has so many different political parties, so many different agencies. And even in the Senate, you can see that some senators are very pro-innovation. Some senators want, like, 'Let's protect the U.S. dollar to the maximum, for the longest time, for as long as we can, and not have the next thing.' Or maybe they don't realize that they will not have the next thing. But you know, there's debate. It's a democracy."
Listen and subscribe to the gm podcast wherever you get your podcasts.