Binance Founder Warns Companies of Bitcoin Risks Amid Adoption Wave

Changpeng Zhao, the founder and former CEO of Binance, has issued a warning to companies adopting Bitcoin as a treasury asset, emphasizing the importance of understanding and managing the associated risks.

In a June 3 post, Zhao acknowledged that risk is an inherent part of doing business but stressed the need for proper assessment and management. He explained that risks are not binary but exist on a spectrum from 0 to 100. Zhao warned that failing to take risks can be as dangerous as taking too much, as it may lead to missed opportunities or unpreparedness for future shocks.

Zhao also noted that risk isn’t inherently negative if approached wisely. He suggested that with the right balance, companies can achieve the best risk/return on investment (ROI) ratio that works for them. When asked how companies can prepare for worst-case scenarios, Zhao pointed to potential financial collapses, such as a currency losing all value or Bitcoin going to zero, as events businesses must be prepared to endure. He noted that extreme cases, while rare, do happen in real life.

Zhao’s comments come amid a wave of companies adopting Bitcoin as a treasury asset. Over 200 firms now hold Bitcoin, with notable additions like Trump Media and GameStop recently joining the ranks. The top 100 holders collectively control more than 814,000 BTC, with Strategy (formerly MicroStrategy) remaining the largest institutional holder, with over 580,000 BTC under management.

Market observers have explained that this shift is driven by the belief that Bitcoin offers protection against counterparty risk and currency instability. Holding Bitcoin allows firms to minimize reliance on third parties, especially if they opt for self-custody or work with custodians that don’t lend out assets or only issue overcollateralized loans. Bitcoin is also seen as a valuable tool for multinational companies operating in various currencies, acting as a bridge asset that reduces the friction and costs of cross-border transactions. Additionally, Bitcoin can act as a defensive asset during low-interest or inflationary periods, with its capped supply and predictable issuance giving it a unique advantage in preserving long-term value, unlike fiat currencies, which are vulnerable to debasement.