Regulations are a must for the blockchain and crypto industry, says Binance CEO CZ
Regulations are a must for the blockchain and crypto industry, says Binance CEO CZ
The Center for International Relations and Sustainable Development (CIRSD) had the privilege to host one of the sessions at the biggest International Relations event in the world, Global Town Hall! We had a fascinating conversation on the topic of the future of blockchain, with CZ, Changpeng Zhao, the Founder and CEO of Binance, the leading blockchain ecosystem and the largest cryptocurrency exchange in the world. CZ shared that while cryptocurrency and blockchain work on a borderless principle, the growing size of these markets has raised the inevitable question of regulation.
Binance truly swept the crypto currency and blockchain market with their innovations, which were geared towards the users. ‘‘What made us successful is our user protection. It is about building the trust. We value our users. They trust us with their money, with their crypto, and that trust is really important.’’ CZ highlighted that it is this trust that affects the growth of a company the most, not being global or unregulated. Nevertheless, exactly this user safety, as the president of CIRSD, Mr. Vuk Jeremic, who moderated the discussion, pointed out, has been the topic of debate among the general public, as many fear that cyber crime and money laundering will go rampant if the blockchain industry stays unregulated. The CEO of Binance believes that cooperation between industry players and regulators is the key to curbing such threats. ‘’In new industries there are many bad players. And because this is a decentralized space, it is actually quite hard to regulate. Anybody can issue ICOs. We have been trying really hard to fight illicit players in the space. We welcome regulations. We want to work with the regulators to share our know-hows, and to share our experience, and also understand what they want to do from a traditional financial space industry, so that we can bridge the gap and lead by example how to properly regulate this space. The industry players and the regulators need to work together to bring healthy regulations into the space.’’
When asked whether it is possible to regulate such industries in the same way that traditional financial industries have been regulated, CZ shared that that is a difficult task, as these industries are, fundamentally, operating in different ways. ‘’I think the first logical step most regulators, even if I was a regulator, would do, is just forward the existing financial regulations into crypto. But Crypto is fundamentally different and right now, to be honest, most regulators are only looking at the centralized exchange part, which is a larger revenue generating part of the business. But there are many new applications in the decentralized space, there is Di-Fi, NFT, decentralized social networks etc. All of this doesn’t exist in the traditional financial industry and you can’t use the existing regulations to regulate that. I think we can borrow from what we know already but we need to evolve that, we need to adjust that and we need to enhance those. Also, the other thing is, most of the regulators today come from the banking industry, they know how that works. But today, because this industry is so new, many of the regulators do not have experience running a large crypto currency exchange or running a Di-Fi project.
Recently, CZ has launched a momentous document named the ‘Bill of Rights for Crypto Users’. ‘’There are very few organizations in the world that talk to regulators about crypto currency regulation as much as we do. Different regulators care about different things and sometimes we get so narrow looking at something that we forget the whole picture and consumers are not a part of this conversation, usually. We actually have a more detailed document on what would be a recommended regulatory framework from us. We are also sharing that with regulators around the world now and at some point we will probably publish it. We said: look we got to adopt a collaborative approach, the industry players need to work with regulators, we need to work on regulation. And most importantly we need to protect consumers. We need to protect their assets, their rights and also their access to crypto. I believe this is the future technology that will power money, which will also power financial economies and every other economic sector dependent on the financial sector. I believe this is a very important thing for people to have access to. We should not block our people’s access to technology innovation, to the future of financial systems. We feel that it is better for us to share that.’’
As for the future of Binance, CZ has decided to start with Binance’s transition into a true financial service company. ‘’The first 4 years we kind of operated like an internet platform. I think over the last few years, the regulators are increasingly more interested in this space, given the growth of the space. We need to transition from a technology company into a financial services company, with all the proper licenses and with the existing licenses for financial services. Having some regulation is good for the industry because, right now, the people who are in crypto, are probably less than 5% of the population globally. Those guys are early adopters. They are ok with depositing money onto a website without any licenses. But moving forward, I think for mass adoption, people probably prefer platforms that are licensed and regulated. That provides a level of comfort and a level of transparency, and we want to do that too.’’ He also shared that currently ‘’US is one of the best examples of places that are very friendly to crypto currency exchange.’’
Mr. Jeremic brought up the fact that more central banks are looking into creating their own digital national currencies and asked whether there is a possibility that in the future we will hold both digital and national currencies. The CEO of Binance highlighted that there are different aspects to this. ‘‘The central bank issued digital currencies, even though they use the blockchain technology, they probably have private keys, public keys, wallets, addresses etc. So the technology looks very similar. There will probably be big differences in their properties. Central Bank issued digital currencies will probably have continued unlimited supply, whereas the native cryptocurrencies, like Bitcoin, Ethereum, BNB, they have limited supply. There is no inflation, there is no quantitative easing at all. That limited supply in property of money is quite important, and that will be different between the two, I think. I don’t see any central bank digital currencies having limited supply. The second is the permission or permission-less.
Although the general public usually connects blockchain to crypto currency only, CZ emphasized that blockchain technology can and is being used for many different purposes, that could transform our lives in the future. ‘’The blockchain technology is, the first time in human history, that we were able to collectively maintain and trust a record without a central party involved. And, no one is rejected. If you follow the protocol, you are accepted in the network. This has very far reaching applications like notarization of records, land titles, elections, high channel logistics, verifications, insurance etc. There are many different applications to it. We are just at the tip of the iceberg. But, even just with the tip of the iceberg, we are at the tip of the tip of the iceberg. The tip of the iceberg is the financial industry money. This technology is very adoptable to money. There is a huge part that most of us are not even looking at yet. But the potential is definitely there. If you look at 20, 40, 50 years from now, I think we will get there.’’
Lastly, CZ shared that one of the people he admires most is Elon Musk. ‘’He manages multiple businesses, and they are all on a grand scale. He is mission driven. He is a little bit weird, but he is a phenomenal entrepreneur. However, I don’t approve all of his actions. Especially the way he tweets about how he is pro crypto and then is negative about Bitcoin. I wish he stayed positive. As such a large influence, with such a number of followers, you can’t swing, because it does impact price. What you say publicly does cause markets to move. I wish he could be more careful of that. But overall, I respect him hugely.’’
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