CZ Explains Binance Openness to Regulations

Changpeng Zhao, addresses Binance’s stance on regulation and explains why regulation and trust are correlated

Regulation Brings About Trust

The Chief Executive Officer (CEO) of BinanceChangpeng Zhao in an article on Binance’s blog answers why Binance chooses regulation and dispels certain myths and some common misconceptions regarding regulation. 

Source: Consumer protection and growth of innovation can be spurred by good regulation

The man instrumental in building Binance and building the crypto exchange platform said

‘The real world is a gradient scale on multiple vectors, but it is still very simple. Good regulations will be good for crypto. Bad regulations will be bad for crypto.’

This qualifying statement sets the tone of the article. CZ went on to explain that regulation is not bad for crypto. In fact, it is the converse because regulation will build trust. He identifies four main reasons as to why regulation will be beneficial. 

Mass Adoption

CZ estimates global crypto adoption stands at 5%. This puts the entire crypto industry at an early adopter phase. Only a small percentage of the global population is comfortable depositing money in an offshore exchange. The remainder remains skeptical. This larger group of individuals typically prefers using an onshore, licensed exchange with a presence within the jurisdiction. 

Having a license will bridge this gap. This allows for mass adoption by ticking the boxes for the balance 95%. It will also increase the pace of adoption. 

Source: Regulations will allow bridges to be built to the legacy system

Banking Integration

CZ touches on the need to build bridges between crypto and fiat. He said

‘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.’ 

In order for the crypto industry to grow, there must be fiat on and off-ramps. This is because most of the global wealth is still locked in fiat. The way to tap into this wealth is by integrating with the legacy system. This includes banks, financial institutions, and payment services. To achieve this, crypto-based institutions need licenses. 

Shaping Regulation

Binance is the biggest crypto exchange platform. This standing gives Binance a market presence. Binance is in a position to influence the regulation as it develops. Standards of best practices contribute towards developing a healthy and thriving industry. 

The fundamental industry-specific practices range from Know-Your-Customer (KYC)/Anti-Money Laundering (AML) protocols, security, wallet management, listing frameworks, customer support, dispute resolution, and internal employee policies.     

Weeding out Bad Players

CZ also acknowledges that in a regulated market, smaller exchanges with dubious tactics that harm their users will be eliminated. Although the article did not elaborate on this point, one of the major concerns in the crypto industry is rug pulls. Thodex, a Turkish crypto exchange closed down after its CEO fled with hundreds of millions of stolen money. 

Binance’s Open Invitation 

CZ ends the discussion in the article with an open invitation to regulators worldwide for joint collaboration. Regulators must not only fashion a compliance framework for centralized exchanges as there are other segments in the crypto industry. Working together will bring about good regulation that protects consumers and attracts innovation.

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