The world’s largest online cryptocurrency exchange has launched a New Zealand version of its marketplace to help shape future regulation of the industry.
Binance, which is ranked the largest exchange of its kind in the world, has registered as a financial services provider with the Department for Business, Innovation and Jobs.
Local investors could already access Binance before it was registered, and the move meant the company would have to comply with local regulations.
Binance NZ will join an external dispute resolution program, perform customer due diligence, comply with local anti-money laundering rules, and share customer information with the tax department.
Chief executive Ben Rose told RNZ that the company wants to log where its users are.
“We’re really focused on working with regulators and governments to build the industry in a sustainable way,” Rose said.
“Regulation is absolutely the way forward for the industry, so we’re looking forward to working on that in New Zealand as well.”
Recent surveys showed that one in 10 New Zealanders have an investment in crypto, which was below the global average of 15% and Binance NZ wanted to make up the difference, he said.
The company’s existing customers will now access its marketplace through the New Zealand platform, where they can trade cryptocurrencies and non-fungible tokens (NFTs).
Binance, unlike crypto brokers, is a fund custodian, meaning investors can keep their money within the platform, allowing them to engage in staking.
However, clients cannot trade more speculative products, such as derivatives and futures, as this requires a special license from the Financial Markets Authority.
“We’re keen to acquire this license and that’s something we’ll be looking to do in the future,” Rose said.
When asked if customers could bypass the local platform to access these services overseas, Rose replied, “People can always do the wrong thing, people can always break the law.”
“We strive not to. We strive to ensure that all New Zealand users can use the Binance products that we are licensed to offer.”
Binance’s expansion comes at a difficult time for the entire cryptocurrency industry.
Bitcoin – often seen as a benchmark for crypto assets – had lost nearly 60% of its value since the start of the year.
The sell-off coincided with the aggressive tightening of monetary policy by the US Federal Reserve, which also dealt a blow to other financial markets around the world.
The slowdown has had serious consequences for crypto platforms and lenders around the world, which have been hit by a sudden drop in trading volumes and extreme volatility.
Christchurch-based exchange BitPrime was among those caught in the crossfire.
The gyration of the markets, along with rising costs and a drop in trading activity created a liquidity crisis for BitPrime, forcing it to suspend operations.
The company, which at one time controlled between a quarter and a third of the domestic market, had recently been put up for sale as a going concern after struggling to secure a capital injection.
Rose said that like all asset classes, cryptocurrencies have experienced market cycles.
“Volumes have absolutely gone down in the bear market, but for us, we’re operating in global liquidity. So we’re seeing $76 billion being traded per day on our platform…so in terms of liquidity, we’re not having any issues.”
He said he was confident the market would rebound and was optimistic about Binance’s growth prospects.
The Financial Markets Authority has generally not commented on specific entities, but said it was aware of Binance’s intention to register in New Zealand.
In advice to investors, a spokesperson said cryptocurrencies were high risk and extremely volatile.
“If you want to buy cryptocurrencies, use a New Zealand-based trading platform as this offers a minimum level of protection.”
They also warned that these assets and the platforms they trade on are often the target of online hacks, scams and fraud.