At a Hong Kong media event, the Binance CEO stressed the importance of all-round active engagement in creating effective crypto regulations.
Binance CEO Changpeng “CZ” Zhao recently weighed in on the formation of crypto regulations as a guiding principle over the digital asset class. According to Zhao, regulators need a deep understanding of digital currencies to formulate proper rules for effective oversight. The Binance CEO also added that regulatory clarity can only be reached via active engagement between regulators and major crypto stakeholders.
Closer Look into Binance CEO Stance on Crypto Regulations
CZ shared his thoughts on crypto regulation and mass Web3 adoption at the 2023 Hong Kong Web3 Festival. In a fireside chat with HashKey Capital CEO Deng Chao, the Binance CEO said proper crypto regulation will boost mainstream adoption. However, Zhao also stressed that crypto regulators have to rely less on mainstream finance tenets when formulating crypto laws. As he put it:
“There is a very natural tendency to borrow traditional financial industry regulations to apply to crypto. Crypto is different from banks and traditional financial industries.”
Furthermore, the Binance CEO added that deciding on crypto regulations boils down to ascertaining how to classify different assets. According to Zhao, there are several types of crypto assets, and simply knowing how to classify each is crucial. CZ further explained that some crypto assets look like securities while others resemble commodities or utility tokens. The Binance chief executive also added that some digital assets might even feature a combination of all previously mentioned characteristics.
Zhao opined that the crypto industry should be allowed to fully develop before introducing regulations. The reason for this ‘full-circle’ suggestion is that one cannot infallibly predict what will be popular in crypto. However, CZ also said that crypto industry players have to be more patient as regulatory processes play out. According to the Binance CEO, the first draft of regulations is usually overly restrictive, but these subsequent drafts invariably balance out over time.
At this year’s Hong Kong Web3 Festival, CZ stressed the need for regulators to actively engage crypto players. He admitted that although there is an increased number of receptive regulators worldwide, some remain cynical. In Zhao’s opinion, any form of crypto regulatory cynicism or skepticism could deter the industry’s participants from playing ball.
On the future of centralized finance (CeFi), asset security, and mass Web3 adoption, Zhao had a lot to say. He said Binance is taking numerous measures to improve infrastructure and safeguard users’ assets in light of security incidents in the CeFi space. Although CZ admitted that CeFi and decentralized finance (DeFi) have minor issues, he also believes that use cases for both will grow.
Likewise, the Binance CEO predicted that Web3 and crypto use cases would also increase exponentially going forward. According to Zhao, the fact that several governments seek to contain crypto might inadvertently serve as the digital asset class’s growth catalyst. Conversely, he also added that governments placing more restrictions on traditional financial markets could actually drive more people to crypto.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
When he’s not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.