Pivot: How Binance changed its compliance strategy

Over the past 10 months, Hoptrail has been charting Binance’s compliance performance through our Risktrail platform. In this blog we dive deeper into crypto’s largest exchange by volume.Legacy Issues** These issues were compounded with the leak of the so-called “Tai Chi document” in 2020, which detailed the exchange’s alleged (but unconfirmed) attempts to circumvent US regulation through its subsidiary Binance US. **In early 2021, Binance hired two former FATF executives, Rick McDonnell and Josée Nadeau, as compliance advisors. This was part of a wider attempt to strengthen internal controls, coming amid a string of regulatory warnings in the final months of 2021.The issue prompted a significant shift in strategy within Binance. It became focused on regulations. Publicly, it embarked on an effort to obtain registrations and licenses globally to transform into the world’s most licensed exchange. In May 2022 Binance announced regulatory approval in France, Bahrain, and Italy. This was followed by Spain in July. Kazakhstan rounded off the set with approval earlier this month. **There are several lessons to take from Binance’s journey. One is strategic. Binance now has at least eight licenses and/or registrations globally – most of those obtained in the last 12 months. It also now has mandatory KYC procedures, well-defined AML policies and a vast compliance team. Binance has leveraged this regulatory clarity. The approvals it has won has led to a slow but noticeable shift in the public narrative. More broadly, these events show the need to align to new regimes - not just as a strategic goal, but as a long-term commercial and reputational necessity.