Compliance is the Key to Absolute Advantage! What New Value Does the New CEO Richard Teng Bring to Binance?

At the end of November 2023, the world’s leading exchange, Binance, reached a settlement agreement with US regulators. As part of the agreement, the founder and CEO, CZ, agreed to step down as CEO.

In his resignation statement, CZ mentioned that after 6 years of accumulation and effort, Binance has built a strong and excellent team that is capable of moving forward independently. He also announced the appointment of Richard Teng, the current Global Head of Regional Markets, as the new CEO of Binance.

Binance, as the global leader with nearly 50% market share, did not experience significant capital outflows or any bank run despite such a major development. The volatility of Binance Coin (BNB), the exchange’s token, was also lower than expected. This reflects the market’s trust in Binance’s long-term reputation and the confidence and expectations users have in the new CEO.

As the industry moves towards 2024, it remains to be seen how Richard Teng, the new CEO with 30 years of financial regulatory and compliance experience, will lead Binance and the entire crypto industry into the next phase. We may get insights into his plans through his public statements and interviews.

How to interpret the US regulators’ actions against Binance?

Before discussing the next steps, it is important to understand the underlying motives of the US actions against Binance from a market perspective. Last November, the closure of FTX, the former second-largest US-based exchange, significantly impacted the US crypto market. After a year of market recovery, regulatory agencies and companies have been actively developing crypto-related businesses. Whether it’s the securities and financial industry, large institutions, or individual investors, there has been great interest in the crypto market, especially in Bitcoin spot ETFs.

The settlement between the US Department of Justice and Binance coincidentally occurred two months before the deadline for the approval of the Bitcoin spot ETF. This means that the Bitcoin spot ETF may become the preferred channel for traditional financial funds to enter the crypto assets, ensuring transaction fees and tax revenue for the US government and institutions.

Some believe that this is a protective measure by the US government to maintain market competitiveness for traditional financial institutions, with Binance, the largest player, being the first target.

“Unavoidable historical mistakes” and helplessness under regulatory ambiguity

Firstly, unlike other troubled crypto companies in the past, the US regulatory agencies’ charges against Binance and CZ are only related to historical mistakes made by Binance during its early development in the US. These mistakes include failure to obtain licenses or implement anti-money laundering requirements. There were no allegations of misappropriation of user funds or market manipulation. All user assets were protected, ensuring the security of user funds.

In fact, there is currently no specific crypto regulation in the US. It was not until the closure of FTX that regulators started to enforce existing laws more rigorously, which faced protests from US-based players such as Coinbase, who believed that enforcement was replacing regulation and suppressing innovation. This highlights the clash between the rapidly evolving crypto industry and the slow development of global regulations.

Richard Teng, in a previous statement, mentioned that fines are not uncommon in the financial industry. If you search for the fine lists of financial institutions, the amount is close to 90 billion USD. Regardless of whether Binance is a case, it is now possibly the most regulated exchange globally, with a strong focus on compliance.

Regarding Binance’s operations, Richard Teng, the new CEO, expressed optimism for the long term. He will lead Binance’s transformation from a tech startup to a mature financial institution, including establishing a global headquarters and a board of directors. According to the settlement agreement, there will also be independent monitors to oversee Binance’s compliance with the agreement. This means that Binance’s compliance system will be endorsed by the US government, which is a positive development for users.

According to Binance’s 2023 annual report, the company has obtained compliance licenses and registrations in multiple countries and invested 213 million USD in compliance efforts.

Richard Teng, a 30-year regulatory expert, has the potential to create a new era

Richard Teng holds a Master’s degree in Applied Finance (with distinction) from the University of Western Australia and a Bachelor’s degree in Accountancy (First Class Honours) from Nanyang Technological University. Before joining Binance, he served for 6 years (March 2015 – March 2021) as the CEO of Abu Dhabi Global Market’s Financial Services Regulatory Authority, the main international financial center in Abu Dhabi. He demonstrated his abilities as one of the most innovative regulators in the world. He has also served as the Chief Regulatory Officer at the Singapore Exchange (SGX) and the Director of Corporate Finance at the Monetary Authority of Singapore (MAS). MAS is one of the institutions with the most comprehensive regulatory framework for virtual assets globally.

Richard Teng officially joined Binance as the CEO of Binance Singapore in August 2021. He later took on the role of overseeing the Middle East and North Africa regions, followed by the European region, and eventually became the Global Head of Regional Markets, responsible for all regional markets outside of the US. In this role, Richard Teng led regional teams to ensure strong strategic partnerships, cultivate innovative ecosystems, and expand cryptocurrency ecosystems within their respective regions. In November of this year, he succeeded as the new CEO of Binance.

Richard Teng is dedicated to promoting unified global rules

In an interview with Fortune, Richard Teng mentioned that one of his main goals is to help the crypto industry adopt unified global rules, similar to the rules enjoyed by the banking industry. This includes resolving debates about whether various types of digital assets should be classified as commodities, securities, or other categories based on their unique blockchain technologies.

“Regulators cannot effectively regulate an industry if they do not understand it. Just like bankers or banking regulators without bank accounts.” Richard Teng stated.

Richard Teng will utilize his experience in regulatory agencies and his understanding of the crypto industry gained during his time at Binance to actively promote compliance in the crypto industry. This may be the most challenging and far-reaching task in the history of crypto adoption. If successful, Binance will enter a new era.

After assuming the role of CEO at Binance, Richard Teng stated in his first blog post, “In terms of the industry, we must focus more on collaboration with policymakers to contribute to the development of a globally unified regulatory framework, protect consumers, and embrace innovation.”

Richard Teng: Regulatory clarity and optimism for cryptocurrencies

In the Binance AMA in December, Richard Teng stated that regulatory clarity will attract institutional investors who will bring new assets, liquidity, users, products, and even research. This is crucial for the widespread adoption of cryptocurrencies. He also expressed great confidence in the development of the crypto industry, stating that the adoption rate of cryptocurrencies in the next five years will far exceed the past five years.

Richard Teng’s vision for the Web3 future: Enhancing financial inclusion and reducing cross-border remittance costs

Richard Teng believes that embracing innovation through decentralized applications (DApps) empowers individuals and gives them more control over their personal information. To achieve this goal, continuous promotion of Web3 growth and applications, as well as the construction of an ecosystem that can change the world of financial technology, is necessary. This aims to fulfill the promises of blockchain: enhancing opportunities for financial inclusion, cross-border remittances, and reducing transaction costs.

Regardless of how the crypto industry and exchanges will develop in the future, Binance will always be at the forefront. To achieve this vision of improving the internet and finance, innovative collaboration with regulators is necessary. The new CEO, with 30 years of financial regulatory and compliance experience, is undoubtedly the most suitable candidate for this role. Richard Teng will lead Binance and the crypto industry into a new chapter in history. As of the time of this submission, Richard Teng announced that Binance has just surpassed 170 million global users.