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Crypto Regulatory Clarity Will Help Scale Adoption – Binance CEO

BlockNews Team by BlockNews Team
October 2, 2022
in Business, Crypto, Media, Social
Reading Time: 4 mins read
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Financial institutions and large corporations have traditionally viewed the cryptocurrency ecosystem with skepticism. This is because crypto regulation has continued to lag, preventing many investors from going all in. The DeFi space remains a no-go zone for many investors worldwide due to regulatory complexities and risks, which Binance CEO Changpeng Zhao says could change through clear regulations. 

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Regulations Will Ease Crypto Adoption, But Not All Are Good

It is expected that the bold steps taken by countries like El Salvador and the Central African Republic to legalize Bitcoin and cryptocurrencies will open doors to clear regulatory regimes in the crypto space that would “ease” crypto adoption, according to the Binance CEO. 

In an exclusive interview with Yahoo Finance, the CEO of the largest crypto exchange said, “Having regulatory clarity will ease adoption. I think for the mainstream users, 95% of users that are not in crypto yet, having regulation will ease them into crypto.”

In an opinion article published by Yahoo Finance on Tuesday, Zhao said:

 “… while some in the industry might say that working to advance regulation goes against the ethos of cryptocurrency and blockchain, I would argue that a stable regulatory environment can only support innovation and is essential to establishing trust in the industry, leading to long-term growth.”

The debate around crypto adoption has elicited different opinions, with some analysts claiming that increased global regulation may stifle rather than promote crypto adoption. With the Australian government announcing a new crypto regulatory framework in August and the U.K. government’s plans to introduce rules for stablecoins, governments around the globe appear to be taking steps to monitor and control the cryptocurrency industry, citing the need for consumer protection. 

However, crypto enthusiasts and professionals believe that such regulatory rules could suppress innovation that has made blockchain technology so successful, threatening the very safety of consumers they claim to protect. 

Zhao appeared to partly agree with the views saying that not all regulations designed for crypto are “good.”

“Regulatory clarity helps. But it’s not to say that all regulations could be good. We have to look at the specific regulation. For example, we’ve seen in other countries where they have a clear ban on crypto. That’s one type of regulation that’s not good… Bad regulations are bad. Good regulations are good.”

Binance Is In Talks With Multiple Regulators – Zhao

The U.S. Securities Exchange Commission (SEC) has been investigating several cryptocurrency exchanges, Binance included, in an attempt to regulate digital assets by enforcement. Asked whether the crypto trading platform was in talks with the U.S. SEC to gain registration approval, the Binance founder said that the firm was talking to many officials in different jurisdictions.

Zhao confirmed that Binance was “talking with all regulators simultaneously,” but “I don’t know the specific details of those dialogues.”

Earlier this year, SEC chair Gary Gensler urged crypto firms to register with the regulatory agency reiterating that these companies are likely trading securities — which fall under the regulatory purview of the SEC. Recently, Gensler said most cryptocurrencies are securities based on how the tokens are used with the expectation of making profits. 

Speaking at an event organized by the Practicing Law Institute on September 8, the commission’s chair said there was no need for any new guidelines for the crypto industry. To clarify this further, Gensler said that the existing rules by the SEC guide the crypto industry, whether it concerns token issuance or other services like lending. In his view, most crypto or tokens qualify as “securities”.

On his part, Zhao believes it is “a bit simplistic” to classify all cryptocurrencies as securities, countering Gensler’s arguments. “I think that’s a more simplistic view, similar to the early days of the internet,” Zhao said. “People ask, is the internet radio, a magazine, or something else? It is a magazine, radio, and many other things. We cannot look at this as one asset class.”

According to the Binance executive, there is a wide variety of digital assets, with some qualifying as currencies and others falling into other types of investments. “We could point to many different tokens that are not securities,” he said.

Zhao’s comments come when the crypto market is locked in a pullback. The total crypto market capitalization is $947 billion, approximately 70% below its November 2021 peak at $3 trillion. Bitcoin price is currently at $19,590, 71.5% off its $69,000 all-time high reached on November 10, 2021. As consumer prices and interest rates continue to rise, and the dollar continues against major world currencies, cryptos have sold off in tandem with equities. 

Tags: BinanceBlockchaincryptoWeb3
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