Stefan Rust, CEO of independent economic data aggregator Truflation, says that the resignation of Binance founder Changpeng Zhao or “CZ” as part of the exchange’s settlement with US authorities marks a “sad” day that should “serve as a clarion call for the build-out of decentralized products and services.”
Rust adds that the charges against Binance also suggest “jurisdictional arbitrage” is likely to become harder for industry providers, “though Central and South America are becoming increasingly attractive.”
Stefan Rust, CEO of independent economic data provider, Truflation, adds:
“Driving systemic change in established industries is extremely challenging. Being an entrepreneur requires you to hustle hard during your start-up phase to gain traction in a market that is still blue ocean and attract the first wave of adopters. This is even harder if your business poses a threat to industry incumbents or has high barriers to entry like financial services, which is mired in legal and political compliance requirements.”
Rust also mentioned that with Binance, CZ was “a trailblazer in what has become a $1.4 trillion industry in less than 15 years. Just as the early internet founders eventually became integrated into the main market and economic system, though, so too is crypto coming into the fold.”
Full regulation and taxation “are now here, and early pioneers are being judged retrospectively,” according to Rust.
He pointed out that it is “certainly likely that Binance did not comply with all of the rules during its founding: at the time, crypto was a new industry that had no rules.”
He further noted that disruptive technologies and companies also “move fast – they can’t wait around for rules to be applied or else we miss out on groundbreaking innovation.”
If we look at the internet, package software, or mobile technology – “each one has delivered fast-paced, valuable change.”
As noted by Rust, the decentralization of power “is ultimately the main reason for the creation of cryptocurrencies, and this further reinforces the need to expand decentralized services, build better user interfaces, and enable more self-custody of funds. Only in this way can we drive the decentralization that is needed to support the next wave of innovation that will challenge systems that have become overloaded and outdated.”
He continued:
“This also suggests it is going to get harder for jurisdictional arbitrage to take place, although South America is looking increasingly attractive for the industry. Pro-crypto governments in El Salvador, Venezuela and now Argentina may influence other economies looking to bring back leaner bureaucracies to foster innovation and create an attractive environment for talent to build out new disruptive business models.”
Rust also mentioned:
“Ultimately, CZ is a true entrepreneur, having built a company from nothing to hold assets of over $72 billion in a relatively short period. While he may have prioritized speed over regulatory tick-boxing, he never stole customers’ money. He always promised funds were safe and kept that promise. This is something to be said right now.”
He added:
“It’s sad to lose such a strong individual who spoke the truth, played fair, and tried to hold together a business growing at a breakneck pace. We’ve lost some good actors who still stay engaged in the crypto industry; from Arthur Hayes at BitMEX to CZ at Binance, these pioneers meant well and wanted to meet the needs of their users.”
Rust concluded:
“This will, though, ultimately be good for the broader crypto industry, whose biggest player has now “cleaned up its act”. The fine is relatively small considering Binance’s financial reserves, making the company now extremely financially sound. The legitimizing of one of the industry’s biggest players will also help incumbents feel a level of comfort that will allow us all to move forward into a new bull market.”