Crypto exchange Binance to develop digital currency with focus on compliance

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Malta-based cryptocurrency exchange Binance has said it will take a “more conservative” approach that prioritizes regulatory compliance in the development of its own digital currency project, Venus, according to Bloomberg.

Why it matters: Binance, the world’s largest cryptocurrency exchange by traded value, is cautiously moving forward with plans to launch a Libra-like currency against a backdrop of heightened regulatory scrutiny.

  • Several central banks, including the People’s Bank of China (PBOC), have ramped up efforts to develop national digital fiat currency following the mid-June release of Facebook’s whitepaper on Libra, its much-hyped digital currency project.
  • The development of a central bank-issued digital currency has been ongoing for five years.

If we want to launch Venus in a country, we’ll make sure it complies with the regulations.”

He Yi, co-founder of Binance

Details: The cryptocurrency exchange said it would prioritize regulatory compliance over technological developments for the Venus project.

  • Binance plans to form an independent association that will be responsible for the digital currency and will use a basket of government-issued currencies and securities as its reserve.
  • Venus will focus on forming partnerships with governments and companies in non-Western countries, said He.

Context: Binance announced last week that news of the Venus project, which has been referred to as a competitor of Facebook’s Libra. However, the company said it would focus on the adoption of the digital currency in developing markets.

  • Binance CEO Zhao Changpeng, known as CZ, said the initiative aims not to dominate but to co-exist with Libra and its like.
  • The company published detailed research on Wednesday including its views and expectations regarding the development of China’s digital fiat currency.
  • China started clamping down on cryptocurrency exchanges in 2017, which led to a slew of platforms including Binance to set up shop in more crypto-friendly countries. Despite efforts to outlaw cryptocurrency, the central bank expects the digitalized renminbi would eventually replace physical money and give it more control over its financial system.