At a media event in Hong Kong, the CEO of Binance stressed the importance of inclusive active participation in creating effective crypto regulations.
Binance CEO Changpeng “CZ” Zhao recently zeroed in on the formation of crypto regulations as a guiding principle on the digital asset class. According to Zhao, regulators need a deep understanding of digital currencies to formulate appropriate rules for effective oversight. The Binance CEO also added that regulatory clarity can only be achieved through active engagement between regulators and key crypto stakeholders.
Look closely at the position of the Binance CEO on crypto regulations
CZ shared his thoughts on crypto regulation and mass Web3 adoption at the Hong Kong Web3 Festival 2023. In a conversation with HashKey Capital CEO Deng Chao, the Binance CEO said proper crypto regulation will boost mainstream adoption. However, Zhao also stressed that crypto regulators should rely less on mainstream finance principles when crafting crypto laws. As is Put He. She:
There is a very natural tendency to borrow traditional financial industry regulations to apply to cryptocurrencies. Crypto is different from traditional banking and financial industries.”
Furthermore, the Binance CEO added that deciding on crypto regulations boils down to making sure how different assets are classified. According to Zhao, there are several types of crypto assets, and knowing how to categorize each of them is crucial. CZ also explained that some crypto assets are like securities while others are like commodities or utility tokens. The Binance CEO also added that some digital assets may feature a combination of all of the previously mentioned characteristics.
Zhao opined that the cryptocurrency industry should be allowed to fully develop before regulations are introduced. The reason for this “full circle” suggestion is that one cannot infallibly predict what will be popular in cryptography. However, CZ also said that players in the crypto industry should be more patient as regulatory processes continue. According to the CEO of Binance, the first draft of the regulations is usually overly restrictive, but these subsequent drafts always balance out over time.
Active participation
At this year’s Hong Kong Web3 Festival, CZ stressed the need for organizers to actively engage crypto players. He admitted that although there are a growing number of receptive regulators around the world, some remain cynical. In Zhao’s opinion, any form of regulatory pessimism or skepticism about cryptocurrency can deter industry participants from playing ball.
On the future of centralized finance (CeFi), asset security, and mass adoption of Web 3, Zhao had a lot to say. He said that Binance is taking several measures to improve infrastructure and protect user assets in light of security incidents in the CeFi space. Although CZ acknowledges that CeFi and decentralized finance (DeFi) have minor issues, it also believes that use cases for both will increase.
Similarly, the Binance CEO predicted that the use cases of Web3 and crypto will also increase exponentially in the future. According to Zhao, the fact that many governments are seeking to contain cryptocurrencies may inadvertently act as a catalyst for growth for the digital asset class. On the contrary, he also added that governments that place more restrictions on traditional financial markets can drive more people into cryptocurrencies.
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Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify cryptocurrency stories down to the bare essentials so that anyone anywhere can understand without much background knowledge. When he’s not deep into cryptocurrency stories, Tolo enjoys music, loves to sing, and is a movie lover.