Beset by regulatory woes, Binance — the largest cryptocurrency exchange by market value — is working to set up centralized headquarters and taking a more proactive approach to engaging with regulators.

“For the centralized exchange business, we need to be centralized,” Zhao told the South China Morning Post (SCMP) in an interview this week. “We need to have a centralized entity behind it with clear cap tables, clear investors with a corporate board, corporate governance, with very transparent KYC/AML procedures and with very strong risk controls.”

Despite being a centralized exchange, Binance has been operating in a decentralized manner, without specific headquarters.  Originally founded in China, Binance relocated its headquarters to Japan a few years ago, and then to Malta as China began cracking down on cryptocurrency and banned crypto trading. Binance was reportedly headquartered in the Cayman Islands and the Seychelles, according to media reports. Zhao said that Binance’s lack of a headquarters and corporate structures did not work well with regulators, and they expected a centralized structure, which Binance was now setting up. 

Binance was also changing some of its processes, such as eliminating its non-KYC tier, Zhao said. In August, Binance implemented mandatory know-your-customer (KYC) in a bid to step up its anti-money laundering (AML) compliance. All users will now need to complete KYV verification in order to trade on the Binance platform. Amid the regulatory onslaught, Binance has stepped up its compliance efforts and reined in its product offerings such as cutting high leverage and discontinuing support for stock tokens. It has also beefed up its compliance headcount by over 500% in the last year.

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Zhao also spoke about a mentality shift at Binance from being reactive to regulators’ queries to adopting a more proactive stance and trying to engage regulators on Binance’s structure, compliance processes and data sharing.

Zhao’s latest comments echo his previous remarks in July at the SCB 10X DeFi virtual summit, when Forkast.News first reported Zhao saying that Binance was looking to set up corporate structures as it navigates increased regulatory scrutiny. Zhao also said that Binance was actively seeking someone with a strong compliance and regulatory experience to possibly replace him as CEO.

Binance has in recent months faced increasing regulatory scrutiny around the world over its stock tokens, derivatives trading services and KYC practices. The growing list of jurisdictions that have issued warnings to, or launched investigations of, Binance includes the Cayman Islands, Germany, Hong Kong, Italy, Japan, Lithuania, Malaysia, Netherlands, Poland, Singapore, Thailand, the United Kingdom and the United States.

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Zhao did not mention a possible location for Binance’s new home. Binance declined to comment when Forkast.News reached out to ask about the possible location of Binance’s headquarters.

Singapore, where Zhao reportedly resides, could be a possible contender for Binance’s new home given the country’s progressive stance towards crypto. However, the country’s regulator — the Monetary Authority of Singapore (MAS) — recently placed on its Investor Alert List and warned that “may be in breach of the Payment Services Act (“PS Act”) for carrying on the business of providing payment services to, and soliciting such business from Singapore residents without an appropriate license.” has since ceased offering Singapore dollar trading pairs and payment options as well as removed the app from the Singapore iOs and Google Play stores.

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Binance currently operates in Singapore as a separate entity, Binance Asia Services (BAS), with an exemption from holding a license as part of transitional arrangements under the city-state’s PS Act for the provision of digital payment token services. The exemption allows entities to provide services while their license applications are being processed, and will cease when an entity’s license application is approved, rejected or withdrawn. BAS’ license application is currently under review, according to MAS.

According to a Binance spokesperson, was “actively working with the MAS to address concerns that they may have through constructive dialogue” and the MAS notice had “no direct impact on the services provided on Binance Singapore.” Binance Singapore is backed by Vertex Holdings, a venture capital investment holding company owned by Singapore state investment firm Temasek Holdings.