Binance, the world’s largest cryptocurrency exchange, sees “great potential” in Asia markets and is looking at various countries where it plans to expand, Gleb Kostarev, the company’s head of Asia operations, told The Daily Forkast’s Joel Flynn in a video interview.
Acquisitions are part of the expansion plans, Kostarev said, singling out the Philippines as a market with huge potential, and also commenting on opportunities elsewhere, including Turkey.
Binance is expanding globally, winning regulatory approval in the past year to offer crypto services in France, Italy, Spain, Dubai, Abu Dhabi and Bahrain. Last month, it launched a global advisory board, chaired by Max Baucus, a former U.S. senator and ambassador to China, to advise on regulatory, political and social issues.
The following interview has been edited for brevity and clarity.
Joel Flynn: Can you give us an overview of Asia? What are the jurisdictions that you guys are looking at now? Where are you looking at expansion?
Gleb Kostarev: We just announced we secured registration in New Zealand and we launched Binance New Zealand, which was a great step forward.
So overall, speaking about our efforts in terms of licenses in jurisdictions, I would say that Asia has great potential. But at the same time, this region is pretty complex because the regulators have different views on how user protection should be done, what is needed to obtain a license, and what coins can be listed and what coins shouldn’t be listed.
So overall, we see huge potential. For example, in the Philippines, after GameFi got such huge popularity, there is definitely a huge market for us. So right now, we are in the process of finalizing an acquisition and obtaining licenses there.
Also, we think that South Korea has great potential. We recently just signed an MOU with the Busan government and will help them to develop Web3 initiatives.
In terms of markets, Turkey is really huge because people actually are hedging against inflation. They are hedging not only buying dollars or euros. They are also buying crypto. So this actually is a fantastic use case that is showing that for people in countries where inflation is huge, crypto can be some kind of asset for hedging risks.
Also, there are some markets such as India, Sri Lanka, that are very interesting markets. But of course, there is a bit of hostile regulation. For example, in India, they have this tax per transaction rule. And as we can see, it is already affecting local players. Some exchanges have encountered some problems and they will probably be shut down. So we would really like to do more in India, but right now we feel like it’s a bit complicated there.
And in Thailand, we established a joint venture with Gulf [billionaire Sarath Ratanavadi’s Gulf Energy Development]. There is still a licensing process ongoing.
Flynn: I want to ask you how seriously you’ve looked at merger and acquisition in the region, in particular in terms of acquiring local licenses?
Kostarev: Yeah, I would say that acquisition is definitely one of the options for how you can enter a market. So we are evaluating what is needed and if we need local partners for that. For example, some countries such as the Philippines, have put a moratorium on issuing new licenses. So overall, after evaluating all of those factors, we can proceed with acquisition as an option.
Flynn: I want to ask you about India. There are obviously very niche regulatory hurdles there. We know that India just this week, I believe, has been freezing cryptocurrency over concerns about financial crimes. What are the Binance plans for India?
Kostarev: We think that India is a market with huge potential. There is a huge population. Definitely there is space for crypto adoption. So we are really interested in this market.
But at the same time, as you mentioned, you know, there are some issues in terms of the current approach towards the crypto industry. And we think that the tax per transaction rule is a bit unfriendly towards crypto investors. I would say that right now we are evaluating and checking properly what’s going on there.
So we’re keeping track of all new legislative initiatives. And if we see an opportunity to enter the market in some or another way, we will definitely proceed. But at this moment, we would like to understand better the potential effect of this tax per transaction rule on the industry because we already see that it is affecting local crypto businesses, unfortunately in a pretty bad way.
Flynn: A Bloomberg story suggested that more Indians are opting to trade on foreign exchanges like Binance to avoid paying this 1% tax on transactions. Can you give us any idea about user numbers, whether you’ve seen any increase?
Kostarev: I think there is such a trend with some Indian users switching to global exchanges. It definitely exists. But it’s tough to say whether this trend will continue. It’s hard to predict how sustainable this flow will be.
Flynn: Binance founder and chief executive officer Changpeng Zhao (CZ) published a blog post last month to reiterate that Binance is not a Chinese company. What prompted this and why now?
Kostarev: I think there is a huge misconception about Binance globally. You can see in a lot of media where journalists write that Binance is a Chinese company. But CZ wanted to clarify that he was born in China, but he’s a Canadian citizen. And actually Binance doesn’t have any subsidiaries or companies in China. We are a global company. We have hubs in Dubai and in Paris. We are expanding very aggressively. We don’t have a strong connection to China. So this is what he wanted to clarify. This is why he posted that.