Reports have emerged that Binance, the world’s largest cryptocurrency exchange, and its founder and former CEO Changpeng Zhao are advising various governments on regulatory frameworks to deal with digital assets.

Zhao, travelled to Islamabad and signed an agreement to become an adviser to the newly established Pakistan Crypto Council (PCC). Pakistan’s Finance Ministry called the appointment a “groundbreaking move,” one that would reshape the global crypto landscape.

A week earlier, Zhao revealed he had signed a Memorandum of Understanding (MoU) with the government of Kyrgyzstan to help the country in developing its blockchain technology and, a lot more importantly, a regulatory framework for crypto.

“I officially and unofficially advise a few governments on their crypto regulatory frameworks and blockchain solutions for gov efficiency, expanding blockchain to more than trading,” he wrote in a post on social media platform X. He added that he found the work (of working with governments in developing their blockchain technologies and crypto regulatory framework) “extremely meaningful.”

And the firm’s current chief executive, Richard Teng, told the Financial Times the number of countries Binance was engaging with was far greater.

Teng did not mention an exact number, nor did he disclose the names of any specific countries, but said the firm was “advising several countries on creating their own digital assets regulations and establishing national strategic bitcoin reserves.”

Zhao no longer works for Binance directly, working instead as the sole limited partner of YZi Labs – formerly Binance labs.

Mixed reactions

The developments have drawn a mixed reaction, from a sense of excitement to warnings of potential trouble.

Sadyr Zhaparov, President of the Kyrgyz Republic, wrote on X that the MoU with Binance “opens new horizons for the development of digital technologies and the blockchain ecosystem in the country.”

“Pakistan needs cryptocurrency like a fish needs a bicycle.”

Ibrahim Khalil, Canada-based banking and finance professional

Pakistan’s Finance Minister Muhammad Aurangzeb was quoted by AlJazeera saying, “We are sending a clear message to the world: Pakistan is open for innovation. With CZ [Chengpeng Zhano] onboard, we are accelerating our vision to make Pakistan a regional powerhouse for Web3, digital finance, and blockchain-driven growth.”

Zhao himself said in a separate post on X he was “happy to assist and advise any gov on crypto adoption and regulatory policies if they are genuinely embracing crypto.”

But some experts have questioned the timing of Pakistan’s formal arrival on the global crypto scene, accusing the country of having missed the boat.

Ibrahim Khalil, a Canada-based banking and finance professional, was quoted by Al Jazeera saying: “Pakistan needs cryptocurrency like a fish needs a bicycle. Globally, blockchain hasn’t lived up to its hype, and beyond Bitcoin, there’s no compelling success story.”

Some experts also referred to Zhao’s personal background, and questioned whether Pakistan’s government had done a proper background check before appointing him as adviser.

Zaki Khalid, a Rawalpindi-based open-source intelligence consultant, told Al Jazeera: “Zhao, Binance’s co-founder, was implicated, then jailed, on money laundering charges. Zhao being embraced by the federal government indicates that necessary due diligence and vetting for potential conflicts-of-interest have been brushed aside.”

Recent history

In the complex world of financial services, personal background and professional integrity do matter. And that’s exactly why Binance’s newly emerging role as a crypto regulation adviser has raised eyebrows.

In November 2023, Zhao resigned as chief executive of Binance after pleading guilty to charges including failure to prevent money laundering in a US court. The firm also agreed to pay $4.3 billion in penalties.

A month before that, Israel had shut down a number of Binance accounts after accusing them of money laundering and being used to finance terrorist activities. Those concerns still prevail, after recent reports that groups such as the Tehrik-Taliban Pakistan (TTP) were using crypto exchanges such as Binance to raise money for their activities.

And in January this year, France’s public prosecutor announced the opening of a judicial review into Binance’s activities, and accused the firm of money laundering and terrorist financing.

The prosecutor said the firm was “likely to have assisted in habitual money laundering …  in particular drug trafficking and tax fraud,” the FT reported at the time.

Chief executive Teng has insisted that the firm continues to invest heavily in its compliance department and that it is now “in a form and shape that regulators appreciate much more compared to the past.”

But those statements don’t take away the fact that the firm is on a five-year monitoring programme which is overseen by the US’s Financial Crimes Enforcement Network, and aimed at making sure that Binance follows the regulatory rulebook.