For Binance, the strategy is simple – move only to places where the laws welcome cryptocurrency commerce. By following this practical strategy, the platform has become the world’s largest cryptocurrency exchange service in record time.
2017 Chinese Cryptocurrency Crackdown
Before September 2017, China hosted a large proportion of the global cryptocurrency trading volume. Platforms like OKCoin and Huobi were dominating the space, facilitating hundreds of millions of dollars in cryptocurrency trades per day.
Alas in September, Chinese authorities issued blanket bans that prohibited initial coin offerings (ICOs) and virtual currency trading operations. The die seemed cast for many companies operating in mainland China.
Binance, which was only a few months old at the time, acted quickly by moving their headquarters and service out of China, with Japan their preferred destination. The company didn’t stop there, going all the way to Taiwan as well as Singapore.
In doing so, Binance gave itself a favorable head start on the competition who were still coming to terms with the disruption caused by China’s ban. From that time onward, Binance grew at an incredible pace, reaching unicorn status in less than six months.
Since the start of 2018, the platform has gone on an extensive and aggressive expansion drive. During this process, the company hasn’t changed its approach of considering only places where the laws of the land are welcoming to virtual currency commerce.
Speaking to SCMP, Arianna Simpson of Autonomous Partners, a US-based cryptocurrency hedge fund described Binance’s expansion strategy, saying:
It’s clear that Binance is playing a game of regulatory arbitrage. Fiat to crypto on-ramps remain a clear bottleneck in terms of crypto adoption, but being able to offer this type of access is a strong competitive advantage for exchanges – at least, temporarily until others catch up.
After the January 2018 Coincheck hack, the FSA – Japan’s regulatory body – stepped up its oversight on cryptocurrency companies. This move led to clashes with a few platforms, including Binance. As usual, the company wasted little time in setting its sights on friendlier climes.
In no time, news emerged of the company’s move to Malta – a burgeoning hub for all things cryptocurrency and blockchain technology. While regulatory scrutiny continues to increase in the United States, Japan, and many places in Europe, Malta has gone about solidifying itself as the premier destination for the emerging technology.
In recent times, the company has begun experimenting with crypto/fiat trading pairs in selected locations, including Singapore, Uganda, and Liechtenstein.
What do you think about Binance’s rise to the top of the cryptocurrency exchange platform arena? Let us know your thoughts in the comment section below.
Images courtesy of CNBC and Shutterstock.