Why acquiring a bank may not solve the issues faced by Binance or other crypto industry players is what Changpeng Zhao, CEO of Binance, believes. Speaking in the wake of the collapse of crypto-friendly banks in the U.S. and Binance’s problems with payment providers in Australia, CZ said that investing in several banks might be a better option, although it isn’t a guarantee that crypto won’t be cut off.
Binance Founder CZ’s View on Acquisition of Traditional Bank
Binance has examined the possibility of acquiring a traditional bank, but CZ believes this is not an ultimate solution. He made this comment while responding to a Twitter user named @DegenSpartan’s query, where he asked CZ if Binance could buy a bank and make it crypto-friendly.
CZ answered this question on the Bankless podcast. He said “You buy one bank, it only works in one country, and you still have to deal with the bank regulators of that country”. CZ elaborated that buying a bank wouldn’t prevent the regulators from prohibition Binance from dealing with crypto.
Challenges Faced by Crypto-Friendly Institutions
CZ made these remarks after the collapse of crypto-friendly banks such as Silicon Valley Bank, Signature Bank, and Silvergate in the U.S. earlier this year. These statements also coincide with the latest complications for Binance, with Australian payment service providers who have decided to quit processing deposits and withdrawals in Australian Dollars for its customers.
Zhao highlighted that as banks operate in one jurisdiction, they still need corresponding banks to work globally, all of which are in the United States. These banks would stop facilitating international transactions for the local bank if they dealt with crypto, thereby limiting the bank’s reach. CZ urged caution over the idea that purchasing a bank would provide an instant solution to Binance’s problems.
Small Investement May be Better Than Buying One Bank
CZ suggested that rather than purchasing one bank, Binance would opt for making small investments in a few banks and become a minority investor in the hopes that the banks become more crypto-friendly. However, he also acknowledged that even with these potential investments, there is no guarantee that the banks would remain crypto-friendly.
CZ recognizes that banks don’t have very sound business models and are very risky. “They take customer money, they loan it out. If they don’t get it back, they declare bankruptcy”. So CZ prefers running businesses with no debt and no high risk.