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The CEO of the world’s largest cryptocurrency exchange, Binance, has made an important announcement. Binance is working on strengthening its foundations in the West. While US institutions increase pressure through regulators, the EU region is obtaining historic corporate crypto licenses. Binance knows that it needs to take stronger steps to protect its market share. And now it is doing just that.
Binance Financial Statements
Binance France has today released its first audited financial statements. These statements will be published annually in accordance with local regulatory and legal requirements. These initial audited financial statements cover a 14-month period from November 8, 2021, when the company was founded, to the end of the fiscal year on December 31, 2022.
Binance has faced significant criticism regarding its financial statements. The company is trying to assure its customers that they are safe with on-chain reserve evidence. However, without financial statements showing debts and receivables, it is impossible to know what risks the company is exposed to. By starting to publish financial statements for its branches, the exchange could significantly reduce investor concerns by doing the same for Binance Global in the future, with audited financial statements.
Binance Issues/Answers
Binance France holds approximately 1 billion euros worth of cryptocurrencies on behalf of its users (Binance users residing in France). Binance France holds 7 million USDT in its own account. Binance France expects to be profitable in its 2023 accounts, with the sum of its 12-month revenues and expenses. A small loss is seen in the company’s latest report due to delays in the licensing process.
Unlike the four major popular firms, the auditing was carried out by a company called RSM. The report states the following:
“RSM is a leading auditing, consulting, and tax firm with a strong reputation, presence in 120 countries worldwide, and a global team of 57,000 people. This is why Binance France chose RSM as its independent auditor.”
Binance France has only started generating revenue from its users since mid-2022. The following response was provided regarding this:
“After obtaining registered company status, Binance France was able to provide services to French residents in compliance with French regulations. Through Binance France, French Binance users interact directly with a local, regulated, and audited organization.”
So, the burning question is, doesn’t Binance Global need to be audited? The announcement provides the following response:
“Audit requirements are generally determined by local laws and regulations. Any Binance entity that is required to be audited complies with its obligations. Binance France is not the only audited Binance entity. While private companies in many countries are not required to prepare financial statements, we believe that there is market demand for more transparency regarding entrusted assets. Therefore, we have developed the Proof of Reserves, which allows all our users to confirm that their assets are held on a 1:1 basis.”
