Following the crypto winter, Binance has emerged as a mainstay of the crypto industry. While competitors such as FTX collapsed — owing to poor fund management — Binance benefited from its prudent practices and focus on consumer protection.
The company is the largest crypto exchange by all metrics, processing over US$6 billion in daily trades at present — this is almost double that of its next closest competitor. It accounts for over half of the exchange market share, and is one of the few crypto companies to have continued hiring through the market crash.
Beyond this, Binance has helped bail out crypto companies affected by the winter, pledging US$2 billion in financial support last November. The company shoulders an immense responsibility today, with any shortcomings — security flaws, liquidity crises — sure to spell disaster for the wider industry.
Alex Chehade, Binance’s General Manager (GM) for the Middle East (MENA), is confident that the industry is in safe hands and Binance won’t be responsible for a crypto winter such as the one at present. “We are very conservative — we were the first to come out with proof of reserves.”
As is becoming common among crypto exchanges today, proof of reserves confirm the manner in which a company holds its customers’ assets. For example, Binance holds all user assets 1:1 and maintains additional reserves.
This provides assurance that users can withdraw their funds at any given time, says Chehade, adding that “there’s very little scope for failure in that manner.”
In search of home
Regulations have been a hot topic since the crypto winter and rightfully so. For the industry to mature, there’s a strong need for policymakers to step in and ensure that consumers are well-protected from bad actors.
For companies as well, regulations help establish clear boundaries within which they can operate. Although Binance CEO, Changpeng Zhao, takes pride in his company being headquarter-less, it still needs regional hubs which provide regulatory clarity.
In December 2021, Binance withdrew its application to be licensed in Singapore and struck a deal to work with Dubai’s regulators on policies. Since then, the Emirate seems to have become a preferred home for the company.
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