Binance CEO Richard Teng On The Future For Crypto, Growing Pains, And Running A Multi-billion Dollar Global Company

From compliance, user protection, and the future of crypto, Richard Teng, CEO of Binance since November 2023, clearly has a lot on his plate as he looks to help a firm overcome its growing pains as it moves from early industry player to sector giant.

“The company is a very young company,” Teng says, accepting that, “We have committed some mistakes in the past. I think what is important, is if you look at the top 50-100 financial institutions all of them have breached similar provisions.”

Binance’s founder Changpeng Zhao, popularly known as CZ, was famously sentenced to four months in prison earlier this year after pleading guilty to charges of money laundering. Teng clearly still has a lot of respect for the former founder – stating: “The DNA of Binance is very strong, and we are very thankful for the DNA that was built up by CZ, our founder, and that persists still today.”

For his own tenure as CEO, Teng, who previously held regulatory positions in Singapore and Abu Dhabi, perhaps epitomises the new face of Binance, as an industry juggernaut that is using its size to lay, and crucially comply with, the guard rails of a new ecosystem. This dynamic is clearly at play in what he refers to as his three key commitments for the platform, with the first being focusing Binance on being a “user-first organisation.”

“Users are extremely important to us, and their trust and confidence are behind everything we do and behind our success today,” he says. Secondly, and unsurprisingly given Teng’s own background, is a dogged focus on working with regulators around the world to “really uphold standards in this space, to cooperate with them, to keep out the bad actors, and if they do not have framework, we want to work very closely with them to come up with a framework.”

Finally, and linked to the company’s focus on users, is a drive to help shepherd the growth of the crypto industry. “We want to work with all important global partners, work with other parts of the ecosystem to continue to support the development of a very vibrant industry, and a very vibrant ecosystem,” he says.

These commitments are clearly working. Today, Binance has 230 million users around the world, and of that figure, a staggering 50 million were added only this year. “The first 100 million users took us five years to onboard. The second 100 million users took us roughly 26 months… you can see the pace of adoption is becoming very fast,” he says.

The journey of the crypto agenda

Teng began his journey in the cryptocurrency space in 2014 when he was the CEO of Abu Dhabi Global Market (ADGM). During his tenure, ADGM became one of the first financial centres in the world to “push through a very comprehensive crypto regulatory framework to start regulating this space.” This marked the beginning of Teng developing a framework for regulating cryptocurrencies.

Now, in 2024, the industry has entered its “landmark year,” Teng believes, as the elements necessary “for the mainstreaming of this asset class have come to pass.” He cites the approval of Bitcoin and Ethereum ETFs in the US and other countries as giving “a lot of credibility to this space.” Additionally, he notes that close to a third of global regulators are now regulating cryptocurrencies. This shift in regulatory thinking and approval of cryptocurrency investment vehicles signals mainstream adoption, according to Teng.

Another major change Teng observes is that “institutions which for the longest time were naysayers for this industry, have changed 180 degrees.” He specifically calls out large financial institutions like BlackRock, Fidelity, Charles Schwab, Morgan Stanley, and JP Morgan as all now having “a crypto agenda” and “blockchain agenda.” This change in attitude from institutions marks “a huge shift” toward acceptance of cryptocurrencies.

The compliance challenge

Going forward, Teng expects to see “much clearer regulations, which is most welcomed by industry” and “more provisions in terms of customer protection.” He says the “direction of travel now is very clear. You’re going to see greater regulatory clarity and greater compliance.” This regulatory evolution will help further mainstream cryptocurrency, according to Teng.

The importance of this cannot be understated. The disparate nature of the current regulatory landscape for crypto means that players in the sector can find compliance a serious challenge.

While this might be challenging from a macro viewpoint, for Binance, Teng also sees compliance as an opportunity. Given the firm’s size as “by far the largest crypto exchange globally,” they are one of the few companies that can bear the financial burden of compliance.

“We are fortunate that we are in very strong financial position, and that allows us the financial ability to continue to invest very heavily into compliance,” he says, warning that compliance costs “are going to spike up,” and that Binance’s “ability to absorb those costs, to continue to invest and deploy, I think, will make a marked difference for us.”

Already, these costs are ballooning, with Teng revealing that Binance’s compliance costs had jumped from $158m in 2022 to $213m in 2023, a 34 per cent jump which he calls “massive” but adds that costs will “go up even further this year”.

According to Teng, the outlook for Binance is rosy given this investment potentially putting the firm in a strong position “to invest in so many different areas because of who we are,” including both compliance and security given others “may not have the ability to the same ability that we do to protect our users.”

Rise of the institution

While cryptocurrency adoption has grown significantly in recent years, it still remains relatively low on a global scale. Despite the millions of users the industry boasts, institutions have largely shied away, hampering the financial growth of the space.

Institutions dominate financial services, making up large portions of investment, and without this capital the crypto industry would remain the purview of individual investors, Teng notes, however, that this is rapidly changing in line with increasing “regulatory clarity.”

“You’ll see the pickup being much stronger going forward, the pace of growth in the next five years is going to be much faster than the pace of growth that we saw in the last five,” he says.

Teng adds that this year already, Binance has onboarded twice as many institutions and corporates into their ecosystem compared to 2023.

Looking forward

Globally, the post-Covid bounce is firmly in the rearview mirror, with some analysts already raising fears of a 2025 recession. As in every financial slowdown, each industry is affected differently, with none safe – Teng notes that “crypto is no different from any other asset class.”

On whether he believes a recession could be coming, Teng glibly notes that, “I don’t have a crystal ball to look in the future, I wish I did.”

But on the future of crypto: “How this asset class continues to develop is contingent on a few things. It is guided by things happening at a macroeconomic level, it is contingent on the continued innovation of this sector, and the continued use cases and utility that’s coming through on this sector.”

In addition, as is tradition now in almost any conversation with a senior member of any industry, there is an increasing focus on the role of artificial intelligence (AI).

“As with all big corporate firms we are investing in AI, from different angles, how to make work much more efficient, and much more effective. AI is great in many different areas,” Teng says.

Specifically, the CEO points to compliance given AI’s ability to detect trends and analyse trends “at a much faster speed than what manually can be done.”

On the cybersecurity aspect of AI, given its potential for misuse, Teng says: “We work very closely with law enforcement agencies around the world to really help prevent and deter the tech scams of this nature and keep users away from all of these possible scams as far as possible.”

A day in the life

What does it look like being the CEO of the world’s biggest crypto exchange? Well apparently, a lot of travel, an awful lot of travel.

“I travel a lot, meeting with stakeholders, from policymakers, to regulators around the world – we are regulated in 20 different jurisdictions now – meeting with them, working very closely with them, as well as those that have not come on board, thinking of frameworks, engaging with them, engaging with a lot of law enforcement agencies that we are in close cooperation with globally,” he says.

In particular, the relationship with law enforcement agencies is key given the sheer number of requests Binance receives – around 60,000 a year according to Teng.

Inside Binance, Teng runs what he calls “very clinical” internal meetings: “We hold short meetings, we make decisions, and we move on.”

When asked on how he would depict is own leadership style, Teng first laughs, noting that perhaps “that question is best answered by my staff not me,” before launching into an argument on why building a consensus is important.

“It’s not a one-man show in Binance. I work with a capable team of senior leadership, and many of them have been involved in the crypto industry much longer than I have and have much deeper skillsets of knowledge in different areas… we work as a team and I’m very fortunate that we have a top, highly talented, and very professional team at the top that is really assisted by a very dedicated staff throughout our organisation. That really makes my life much easier,” he says.

Under Teng’s leadership, Binance continues scaling new heights. But the CEO’s tenure also signifies the maturing of both Binance and the cryptocurrency industry in general, with the firm leveraging its position to play a driving role in establishing high standards, clarity and confidence in the cryptocurrency ecosystem for years to come.

With its immense yet judiciously invested resources, Binance is well-positioned to steer the course of regulations while supporting grassroots adoption of these nascent technologies – it’s clear that there’s still a long way for both Binance and the crypto industry to go.