Exclusive | How China’s crackdown helped Binance become the world’s largest cryptocurrency exchange
Binance founder Zhao Changpeng is playing a game of regulatory arbitrage to grow the world’s No 1 cryptocurrency exchange wherever it is welcome
Zhao Changpeng, 41, built the world’s biggest cryptocurrency exchange by trading volume in about 165 days by sticking to a simple strategy: expand anywhere, but China.
The meteoric rise of Binance, which was founded in Hong Kong in July last year, was helped in part by China’s decision to crack down on domestic cryptocurrency trading, Zhao said in an interview on the sidelines of a conference in Singapore last month.
When China shut down all domestic cryptocurrency exchanges in September last year, Zhao quickly moved the headquarters and servers of Binance to Tokyo, outside the reach of Hong Kong and mainland regulators, and then to other markets, including Singapore and Taiwan.
Chinese operators of cryptocurrency exchanges scrambled to keep up with new regulations on the mainland, which provided Binance with precious time to build up its business, according to Zhao.
Binance claims to have made a profit of US$350 million, mostly from transaction fees, in the six months ended June 30, as it hosted trades of digital tokens from its 10 million users around the world.
Although they do not serve Chinese clients, cryptocurrency exchange operators OKCoin and Huobi, both of which are based in Beijing, currently operate the next two largest trading platforms in the world for bitcoin and other digital currencies.