Prepare Your Crypto Startups as Binance is Shopping
Major crypto exchange Binance plans to do about three acquisitions every month, according to CEO Changpeng Zhao (aka CZ).
Binance is "actively doing acquisition deals, especially in a lot of these new areas. My view is I’m not an expert in these areas, and it’s better for us to find strong teams that are already doing this well," he told Bloomberg.
And the future, per the CEO, holds quite a few of these deals as well. CZ said that,
"We plan to do somewhere between 20 and 30 acquisitions a year. Most are smaller acquisitions—we don’t announce them. Some will be bigger ones like CoinMarketCap, but we do plan to do about 30 acquisitions each year, which probably means about three deals every month now."
The CEO did not elaborate on potential acquisition targets.
As reported, responding to speculations in South Korean media that Binance might be among potential buyers of the Bithumb exchange, Binance said that they are "always open to considering strategic partnerships and investments at any given time."
Meanwhile, in their recent M&A report, major consultancy company PwC said they expect to see further consolidation in the industry with some of the larger, well-funded, or profitable firms continuing their M&A activities.
"We expect the focus to be not on the acquisition of smaller competitors but rather of firms that offer ancillary services to their current offering (e.g. crypto media, data, compliance, research)," they added.
On multiple occasions, Binance stressed that they're building "the infrastructure for the blockchain ecosystem." They control both custodian and non-custodian crypto exchanges, develop Binance Smart Chain, own a token launch platform, have their own investment arm, an incubator for blockchain projects, provide digital asset research services, have their own crypto wallet, operate a charity foundation, and recently introduced a crypto pay service.
Also, in the interview, CZ went on to discuss some other potential plans. Unlike its competitor Coinbase, which has filed for a direct listing, Binance is "right now [...] not looking at an IPO." The CEO said that the company is cash-sufficient and able to grow itself, adding: "We don’t need a huge amount of money, we are profitable, and we are growing."
On the other hand, as non-fungible tokens (NFTs) are all the rage now, Binance "may look at doing something there," said the CEO.
Besides that, they plan to add more fiat channels, saying that the exchange added about 50 different channels worldwide last year, and that they could "probably add another 30 or 50 more this year."
As for financial metrics related to the company in terms of growth, CZ claimed that they don’t have "a lot of specific numbers." The numbers change quickly based on bitcoin (BTC) price, he said, adding that, as the company is lowering fees across various places, it’s too early in the year to estimate the revenue. But the volumes "have grown quite a bit" in the first two months of this year, the CEO said.
In December 2020, he said that the company expects to have profits of USD 800m to USD 1bn in 2020, up from about USD 570m in 2019.
Also, Binance is making a number of "fairly large expansions" in different areas, including the Binance Card - which is actually losing money, he said. This is fine though, he argued, "because we want to get that product out."
As to whether Binance would eventually becoming a DAO (decentralized autonomous organization), the CEO said "it’s possible, but it’s going to take a number of years."
In the meantime, as reported, Binance is being investigated by the US Commodity Futures Trading Commission over concerns that it allowed Americans to place wagers that violated US rules.
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