Binance CEO Changpeng Zhao or CZ notes that there are many “misconceptions” out there about crypto and that he will address a few of them.
For example, many people say that “Regulation is bad for crypto.” According to CZ, we should not hold such a simplistic view.
He explains that the real world is “a gradient scale on multiple vectors, but it is still very simple.”
CZ believes that good regulations will be “good for crypto.” He also thinks that bad regulations will be “bad for crypto.”
According to CZ, having “good regulations that protect consumers while encouraging innovation is important for growth of the industry.”
He also noted that some might think that “You grow big by being crazy, wild west, or unregulated.”
He thinks that “nothing can be further from the truth.”
He also noted:
“When you are about to deposit your hard earned money with an exchange, the last thing you want is a crazy platform, right? What do you do? You research and find an exchange that other people (and yourself) can trust. Being trusted by users is the best and only way to grow. In most places in the world, being a regulated platform increases that trust for everyone.”
He added that there are many reasons that at Binance, they want regulations.
Mass Adoption
CZ continued:
“Today, I’d estimate crypto adoption to be about 5% globally. This means we are still in the early adopter phase of crypto. These early adopters are OK with depositing money with an offshore exchange they trust. But for the remaining 95% of people – the mass adopters – they would typically prefer using an onshore, licensed exchange, with a local office and/or presence. Therefore, having a license allows us to attract the 95% at a faster pace.”
Better Integration with Banks
He added:
“I know some die-hard crypto OGs will hate what I am about to say next. These crypto OGs hate anything that is slightly centralized. They want to only live in the fully decentralized crypto utopian island. But the fact is, that’s a very small island. Today, 99.9% of money is still in fiat. And, the 5% of people who have crypto typically only have a small portion of their wealth in crypto.”
CZ further noted that for the crypto industry to grow, we “need fiat on and off-ramps.” He also mentioned that we need to “build bridges between crypto and fiat.” For this, we “need to integrate with traditional financial systems, banks, payment services, etc.” and for that, “we need licenses.”
He also noted:
“Today, given our market presence, most regulators who are willing to talk to industry players typically talk to us first. Compared to other industry peers, our voices are usually heard first, and our opinions are usually taken with a heavier weight. In this way, we can influence regulations to the best extent we can.”
CZ added that Binance loves to share their best practices that make users trust them, “from the fundamentals of KYC/AML, to industry specifics such as security, wallet management, listing frameworks, customer support, dispute resolution, to even internal employee policies.”
He also noted that they “hope by sharing our best practices, we can help to build a more healthy industry.”
He added that in a regulated market, “typically only a few large players remain.”
He further noted that they “welcome more exchanges in the space, but we sometimes get frustrated when small exchanges employ tactics that hurt users.” CZ added that they “want to see those stopped.”
He acknowledged:
“There are downsides to regulation. Most regulations mean some level of restrictions in the short term, which is inconvenient for users and hurts business. Over regulation will kill the industry in the local market, and hence make the local market miss out on the next FinTech evolution. But proper regulation will allow the industry to grow faster, not slower.”
He concluded:
“Binance welcomes regulations in the industry and has always worked collaboratively with regulators all over the world. Lastly, today most regulators are only looking at a small section of the crypto market, the centralized exchanges. The industry is much more than that, there is DeFi, NFTs, GameFi, fan tokens, metaverse and much more. We hope by working closely with regulators, we can help to bring regulations that protects consumers and attracts innovation.”