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How does Binance expand its territory in local centers? An interview with the Binance Kazakhstan representative.

Read this article in 28 Minutes

From meeting CZ to joining Binance.

Source: ForkLog

Translation: FYJ, BlockBeats

In September 2022, Binance, a cryptocurrency trading platform, obtained a license in Kazakhstan.

The company has launched a large-scale education program, collaborating with regulatory agencies and negotiating with law enforcement agencies, all aimed at creating a mature cryptocurrency center in the country.

During an exclusive interview with ForkLog, Zhaslan Madiev, the General Manager of Binance Kazakhstan, discussed the work of the local team, the impact of CFTC accusations on their activities, and a personal meeting with CZ.

ForkLog: Hello Zhaslan. Less than a year ago, you led Binance's branch in Kazakhstan and moved from the traditional financial market to the cryptocurrency industry. What influenced this decision - personal interest in cryptocurrency or simply an attractive salary?

Zhaslan Madiev (Zh. M.): My experience is quite diverse. In the past, I have worked as an investment banker, capital market expert, and CFO in the largest state-owned company. I have also served as a prime minister's advisor in the National Bank and Presidential Administration, as well as a deputy minister in the Ministry of Economy. Additionally, I have held the position of first deputy minister in the fields of digital development, innovation, and aerospace industry.

In my previous job, I was able to have a deeper exposure to the cryptocurrency industry. I directly participated in the legal aspects regarding digital assets and submitted it to the parliament.

Then I saw that this market is a thriving industry. I managed to meet with Binance CEO CZ and told him that given the regulatory environment that has already been formed, Kazakhstan has all the prerequisites to become a mature crypto center.

After

, I had the idea of directly participating in industry development practice as a member of the Binance team, because Binance is in a leading position. At that time, the company had just released a job posting for a general manager in Kazakhstan.

I applied, passed the interview, and joined the team starting from October 2022. Although the term is short, I have already done very intensive work during this period.

FL: Did you have any savings in cryptocurrency or were you trading before joining Binance?

Zh. M.: I did not participate in the transaction, but I am familiar with cryptocurrency. The first time I heard about blockchain was when I was studying at MIT, where I obtained an MBA degree in 2015. Since then, I have regularly developed an interest in this industry, products, and various cryptocurrencies.

FL: In your experience, is there a significant difference between cryptocurrency business and traditional business?

Zh. M.: These markets have similar tools, although their names may be different. There are earning tools, such as pledging, deposits, margin trading, futures - everything that exists in traditional markets.

For traditional investors, cryptocurrency can now be seen as a separate asset class. Some funds have already stipulated the allocation of such tools in their investment portfolios. Adoption is gradual, but cryptocurrency has gradually developed in the retail and corporate sectors.

The main characteristic of the encryption market is that it works 24/7 and is always available, minimizing the number of intermediaries and allowing users to independently manage their funds. However, banks are still part of this ecosystem as they help establish fiat channels for cryptocurrencies.

FL: Please introduce Binance's work in Kazakhstan. How many employees are there in the local team and what do they do?

Zh. M.：In September 2022, Binance established a subsidiary called BN KZ Technologies in Kazakhstan and obtained licenses to operate a digital asset platform and engage in custody activities at AIFC.

We have about 90 employees in our branch. This includes compliance experts, personnel involved in operations, and mainly support services. This is because a large number of Binance users face many questions and doubts every day. Our support team strives to respond to their requests as quickly as possible.

Within AIFC, there are attractive incentives for foreign nationals, including zero personal income tax, favorable visa policies, and unlimited quotas for family members. Taking advantage of this, Binance has attracted foreign experts to join its structure, and the team continues to grow.

Currently, Kazakhstan faces fierce competition from other centers, such as France, the United Arab Emirates, or Bahrain.

FL: What is the Binance Kazakhstan team currently working on?

Zh. M.: As required by regulatory agencies, our main task is to develop a local trading platform. We are completing improvements and hope to launch the platform before the end of the first half of this year.

In December 2022, we launched a blockchain engineering and compliance education program at 22 universities. The program is supported by Binance Academy, the National Bank, and the Astana Hub IT Technology Park. Currently, we are training approximately 300 teachers, and students will be able to register for these courses starting in May to begin studying in September. We expect that by 2026, around 40,000 students will have graduated from this program.

We are promoting the BNB Chain infrastructure. So far, approximately 1500 dapps have been created on this blockchain, and our goal is to attract local communities and existing developers to participate in development.

Binance Labs' venture capital division is working to manage approximately $750 million in funds. It incubates and accelerates startups, invests in them, and provides guidance. With the help of the Launchpad platform, projects can access an initial user group to test their solutions.

Binance has a very large ecosystem, and we hope that all of these will serve the development of Kazakhstan and its economy.

FL: Which companies does Binance cooperate with in this region?

Zh. M.: In January, we partnered with the largest national airline, Astana Airlines, to convert miles into cryptocurrency.

Binance has also collaborated with the national bank on multiple initiatives. In February, we released a joint report on the state of decentralized finance in Central Asia. Additionally, we are testing the integration of BNB Chain with the digital tenge (Kazakhstan's fiat currency) being studied by regulatory authorities.

We are exploring use cases and potential opportunities for these tools in traditional financial institutions.

FL: Please provide us with more detailed use cases that you have considered in the context of this project.

Zh. M.: In my opinion, the fastest implementation use case may be a large financial institution participating in the issuance of a stablecoin supported by the BNB chain and backed by the digital tenge (Kazakhstan's fiat currency).

The value of any stablecoin is pegged to a fiat currency, but continuous auditing of its collateral is required. In contrast, ZK-Snarks is a programmable token that allows central banks to automatically monitor whether stablecoins are fully backed. Therefore, financial institutions are interested in this asset when creating various smart contracts and innovative products.

FL: Has the National Bank of Kazakhstan decided to use a specific blockchain to issue CBDC? Will it be BNB Chain?

Zh. M.: Anyone can collaborate with the national bank, and it has no exclusive rights to blockchain. Regulatory agencies make digital Jingguo interoperable, so it is not dependent on one network and can connect to various technologies.

Therefore, you can issue CBDC on any blockchain, but we believe that BNB Chain is the largest and most reliable. Compared to Ethereum, BNB Chain has at least twice the daily active users.

At present, Binance has signed a memorandum with the national bank, and we are discussing this year's work plan in this regard.

FL: Does Binance cooperate with the Commercial Bank of Kazakhstan?

Zh. M.: We are developing multiple fiat channels, including bank transfers and credit card payments. This will allow users to fund and withdraw from their Binance accounts using any local bank card. We hope to launch this service in the first half of this year.

We already have a specific partner bank and we are establishing a cryptocurrency channel with them. I cannot announce it yet as we are still in the development process. However, we are open to collaborating with other banks. The market competition is fierce and we need to diversify in terms of channels and products.

FL: Does Binance plan to issue its own cryptocurrency card in Kazakhstan?

Zh. M.: We are in negotiations with national banks that regulate this field regarding the release of prepaid cryptocurrency cards under the Binance brand. At this time, we cannot say for certain whether this project will come to fruition.

So far, we are explaining to regulatory agencies the operation of Binance in the Middle East, European Union, and Latin America. As for the platform itself, it is ready to invest in development, launch, and pre-financing.

Except for the AIFC territory, Kazakhstan prohibits the circulation of cryptocurrencies. Therefore, even if we obtain the permission of the National Bank to issue cards, it will be legal tender rather than cryptocurrency. However, settlements between users and Binance on the backend will be conducted in cryptocurrency.

FL: Please introduce the cooperation between Binance and AIFC. Does the trading platform provide suggestions to regulatory agencies on regulatory practices in the cryptocurrency market?

Zh. M.: Since obtaining the license to operate a digital asset platform and provide custody services at AIFC, Binance has been maintaining continuous cooperation with at least five regulatory agencies.

• AFSA - Our direct regulatory agency within AIFC issued us a license;

• National Bank, responsible for regulating payment systems and cards;

• Regulators and development institutions that control the traditional banking financial market;

• The Digital Development Department is the authorized agency in the field of digital assets.

• Financial monitoring agency responsible for monitoring suspicious transactions;

As pioneers in this market, we face various challenges. However, due to our extensive international experience working with regulatory agencies from different countries, we have put forward our recommendations to assist Kazakhstan in implementing best practices.

In addition, we also participated in the public consultation on cryptocurrency trading initiated by AIFC.

FL: Do regulatory agencies support the development of the country's cryptocurrency industry?

Zh. M.: This is a regulatory agency for hearings, established to develop the country's digital asset market and cryptocurrency industry. It cannot be said that it has taken an overly aggressive stance, preventing the promotion of innovative products or activities in the local market.

The country's head of state also supports the development of the country's blockchain technology and cryptocurrency industry, as he has publicly stated on multiple occasions. We believe that Kazakhstan will not take the path of banning or strictly regulating new technologies.

FL: What happened with the adoption of cryptocurrency and integration of encrypted payments in Kazakhstan?

Zh. M.: Generally speaking, the development of the encryption industry, especially the work of encryption exchange activities, is gradually progressing.

Regarding the recognition of cryptocurrency as a payment method, this is a very complex issue. It is an area where the central bank should exercise its privileged functions. Therefore, I cannot say that it will happen soon.

FL: Do you support the position of many regulatory agencies that believe it is necessary to strictly regulate the cryptocurrency market?

Zh. M.： My personal opinion is that the regulation of the cryptocurrency market should be as liberal as possible to avoid additional macro-prudential risks.

明确的游戏规则吸引新玩家到管辖区，并允许您将影子经济与白色区域分开。

Translated:

Clear game rules attract new players to the jurisdiction and allow you to separate the shadow economy from the white zone.

Binance has signed a memorandum of understanding with the financial regulatory authority. Within the framework of this memorandum, Binance provides training on on-chain analysis and blockchain technology fundamentals. We are interested in ensuring that law enforcement agencies understand and are able to properly handle these tools.

I do not support rigid regulatory methods because they will stifle innovation.

FL: How do you evaluate the "Digital Assets" law passed in January 2023? What impact will it have on industry companies' work?

Zh. M.: The "Digital Asset Law" came into effect on April 1st, and it is too early to discuss its impact. In most cases, the document aims to regulate mining activities. Prior to this, Kazakhstan's mining industry developed in a chaotic manner, with very controversial issues, especially in providing load for the country's energy system.

This law contains novel provisions regarding the licensing of cryptocurrency mining, liability for illegal activities, and electricity quotas. All of these will still be ultimately determined at the annex level, which will also separately cover NFTs and various types of collateral assets. However, such a framework document is already a great achievement for Kazakhstan.

Binance is constantly participating in parliamentary working groups and making suggestions, not only on the formation of regulatory environments, but also on the legislative framework for the development of the industry.

FL: Can you disclose the user metrics for Binance Kazakhstan?

Zh. M.: Overall, the number of Binance users exceeds 120 million. We cannot disclose specific numbers for individual countries. However, as cryptocurrency becomes increasingly popular, the popularity of trading platforms is also growing, as we can see from the number of registrations. This indicates that customers trust Binance and see various opportunities in it.

Many new projects in the Web3 or blockchain technology field hope to list their Tokens on our trading platform. As part of the listing process, Binance undergoes rigorous selection in terms of development team, code, and value proposition analysis.

Users are also beginning to understand the content behind specific projects, as these types of tokens are seen as good alternatives to traditional financial instruments. It also highlights the importance of communication.

FL: After the Russo-Ukrainian War, thousands of Russians went to Kazakhstan. Many of them are Binance users. Which company maintains their accounts and whether it complies with sanction requirements?

Zh. M.： If Russian users have moved to Kazakhstan and have received a license to confirm their place of residence, we believe there is no problem in providing them with services.

If there are any issues related to sanctions, we must comply with all of these procedures.

Among Binance's 8,000 employees, nearly 10% are comprised of a team of compliance officers who check our compliance with regulatory and sanction requirements on a daily basis.

We have processed over 55,000 requests from various law enforcement agencies and are working hard to respond as quickly as possible.

If there is a blockage, the support service will consider all user requests.

FL: Since the beginning of this year, two cases of Binance accounts being arrested related to illegal trading platforms have been known.

Zh. M.: Large organizations like Binance actively cooperate with law enforcement agencies in different countries. Any suspicious activity we detect can be used for official investigations. If there are sanctions from prosecutors, court judgments, or criminal cases, we can freeze accounts and bear all the consequences that come with them.

For Binance, it is important that illegal activities do not pass through us, as we are the most strictly regulated cryptocurrency trading platform. We comply with compliance procedures and track certain types of transactions, so we can identify suspicious transactions and report them to regulatory agencies.

As for specific cases, I cannot disclose details. All information that can be disclosed is always publicly released by law enforcement agencies.

FL: Given the recent events, how does the CFTC's accusations against Binance and CZ affect your work?

Zh. M.: Binance has always been committed to transparency and has cooperated with regulatory and law enforcement agencies in the United States and other parts of the world. Our compliance services are staffed by experienced personnel in various government agencies. At this stage, the trading platform provides all necessary information to regulatory agencies.

We have not seen any impact of CFTC's charges on Binance's operations in Kazakhstan.

FL: At the beginning of the conversation, you mentioned a private meeting with CZ. What did you talk about at that time?

Zh. M.: My first private meeting with CZ was held in Dubai in January 2022, with the help of my colleagues at Binance. At the time, I was serving as the Deputy Minister of the Digital Development Department, and we had just launched our work in the cryptocurrency industry, attempting to attract major players to our market. Binance, as a large-scale ecosystem, was our first target.

During the meeting, I talked about the regulatory environment in Kazakhstan, the country's leadership support for high technology, and the independent AIFC system based on English legal principles.

I believe CZ is interested in such prospects, as he visited Kazakhstan in May of the same year and met with the country's head of state. During this visit, Binance signed a memorandum of understanding with the Ministry of Digital Development, committing to assist in the development of a cryptocurrency center in the country.

Zh. M.: What can we say about someone who has built the largest ecosystem in the cryptocurrency industry in such a short amount of time? A cryptocurrency trading platform with a daily turnover of $6.5 billion, with over 120 million users in 165 countries, and working with regulatory agencies in nearly 165 countries. In just 165 days since its launch, it has become the world's top grossing platform. This shows that CZ is a person with a clear vision.

Moreover, in my opinion, he does not pursue profits but adheres to certain values. One of them is to ensure people's financial freedom. I also want to point out its simplicity and open communication with people and employees, regardless of their positions. CZ is a very good speaker. One of his speeches is like a rich lecture, during which you immerse yourself in the world of the encryption industry and gain a lot of new information.

FL: Are you happy working under him? What kind of leader is he?

Zh. M.: I think he is a very visionary and professional leader. My colleagues and I are fortunate to have joined this team and work under his leadership, learning his vision and gaining new knowledge every day.