December 29, 2021

Homeless Companies Create New Regulatory Puzzles

A recent WSJ article reported that regulators worldwide – including the SEC & DOJ – are starting to take an interest in Binance, which is the world’s biggest cryptocurrency exchange (and fastest growing financial exchange in terms of users). The wrinkle is that the company denies having any head office or formal address that would subject it to local regulations. According to the article, the company also aspires to eventually go public here.

Although Binance’s CEO says that the company is setting up local offices in undisclosed locations to appease certain regulators, it wouldn’t be the first “fully remote” company to undertake an IPO. John blogged a few months ago about two companies that cleared registration with no headquarters identified on the Form S-1.

As more companies inevitably do this – and as the “homeless” companies get more mature – we’re probably going to start to see regulatory gaps. For example, Rule 14a-8(e)(2) says that shareholder proposals must be received at the “principal executive offices” – does this now mean the CEO’s home address? We’ll look forward to hearing from all the trailblazers out there – and eventually, maybe the SEC Staff – about how to handle these new puzzles.

Liz Dunshee