In the manner of US-based crypto exchange Coinbase, the US subsidiary of foremost crypto exchange, Binance has revealed its plan for an Initial Public Offering (IPO). The IPO will see Binance.US disband from the global exchange in the next three years. In view of this, Binance.US says it plans to lead a major private funding round within the next two months which will confirm its demerger from Binance, the principal arm.
As per the leading exchange’s CEO, Chanpeng Zhao (CZ), Binance.US has its eyes set on an IPO in 2024, following the steps of Coinbase, which has the majority of its services in the US. Coinbase became public in April, trading with the ticker ‘COIN’ on NASDAQ after filing for an IPO to the US SEC back in March. While speaking at an interview, CZ noted that the proposed funding round will help the US Subsidiary attain independence from the main exchange.
Interest in IPOs on the Rise, Robinhood IPO Application Rejected
This has come at a time when the interest in IPOs by crypto businesses is rising. Following its April public listing, Coinbase became the first crypto firm to go public. Since then, apart from Binance, crypto and stock trading app, Robinhood showed interest but its IPO application was stalled by the US SEC, which cited that the exchange was under a series of investigations that disqualified it from launching an IPO.
However, in the wake of regulatory pressure on Binance over its operations, there is a slim chance for an IPO launch. In fact, the controversial Infrastructure bill, touted as a regulatory sandbox for the crypto industry, may prove to be an insurmountable challenge due to its provisions.
US Infrastructure Bill: A Potential Impediment to Binance.US IPO
Some provisions in the bill do not only define and delineate the activities of brokers or exchanges, but also impose high taxes on them apart from the capital gains tax on individual investors for crypto investments. So Binance.US is likely to be dire straits owing to these provisions, except the reason for its proposed independence is so that it could easily cooperate with US regulators.
It would be recalled that in Brian Brooks resigned as the CEO of Binance.US in August when the pressure from US regulators became excessive. Although no reason was given for his resignation, experts hinted at the scrutiny the exchange faced. At the time, CZ assured US users of continued operations while adding that Brooks’ exit would not deter the US subsidiary from serving the US market.
Binance subsidiaries in regions like Canada, Singapore, the Cayman Islands, South Korea have likewise come under heavy scrutiny with regulators questioning the legality of their operations. In July, the Ontario Service Commission (OSC) issued a ‘red card’ to Binance’s subsidiary in the region bringing its operations to an end. Meanwhile, CEO CZ has reiterated on a number of occasions that the exchange was willing to liaise with regulatory bodies. Earlier in August, the founder stated that compliance is a journey.
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