Online cryptocurrency exchange Binance registers in New Zealand
The world’s largest online cryptocurrency exchange has launched a New Zealand version of its marketplace to help shape future industry regulation.
Binance, which is ranked the largest exchange of its kind in the world, has registered as a financial services provider with the Ministry of Business, Innovation and Employment.
Local investors could already access Binance before it registered, and the decision meant the company would have to comply with local regulations.
Binance NZ will join an external disputes resolution scheme, carry out customer due-diligence, adhere to local anti-money laundering rules and share customer information with the tax department.
General manager Ben Rose told RNZ the company wanted to register where its users were.
“We’re really focused on working with regulators and governments on building 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 one in 10 New Zealanders have a crypto investment, which was below the global average of 15 percent 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 custodian of funds, meaning investors can hold their money within the platform, allowing them to engage in staking.
However, customers cannot trade more speculative products, such as derivatives and futures, because this requires a special license from the Financial Markets Authority.
“We are keen on acquiring that license and that is something we will look to do in the future,” Rose said.
When asked if customers could circumvent the local platform to access these services abroad, Rose replied: “People can always do the wrong thing, people can always break the law.”
“We are focused on not doing that. We’re working to ensure that all New Zealand users are able to use products from Binance that we’re allowed to offer.”
Binance’s expansion comes at a challenging time for the wider cryptocurrency industry.
Bitcoin – often considered a benchmark for crypto assets – had lost close to 60 percent of its value in the year to date.
The sell-off coincided with the aggressive tightening of monetary policy by the US Federal Reserve, which had also dealt a blow to other capital markets around the world.
The downturn had serious implications for crypto platforms and lenders globally, who were hit by a sudden downturn in trading volumes and extreme volatility.
Christchurch-based exchange BitPrime was among those caught in the cross-fire.
Gyrating markets, as well as rising costs and a fall in business activity created a liquidity crisis for BitPrime, forcing it to suspend trading.
The business, which at one point controlled between a quarter and a third of the domestic market, had recently been put up for sale as a going concern after it struggled to secure a capital injection.
Rose said just like all asset classes, cryptocurrencies experienced market cycles.
“Volumes have absolutely decreased in the bear market but for us we operate in global liquidity. So, we’re seeing $76b traded per day on our platform … so in terms of liquidity, we don’t face any issues.”
He said he was confident the market would bounce back and was bullish about Binance’s growth prospects.
The Financial Market Authority did not usually comment 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 purchase cryptocurrencies, then 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, were often targets of hacks, scams and online frauds.