Binance CEO Changpeng “CZ” Zhao emphasized on Tuesday the importance of clear cryptocurrency regulations over the existing regulatory ambiguity during the Hong Kong Web3 Festival.
“Having no regulatory clarity is the worst. Having bad restrictive regulations are better than that. And then having unclear ones and then chasing people by enforcement is really, really bad,” he said.
These comments follow a recent lawsuit against Zhao and Binance by the U.S. Commodity Futures Trading Commission, accusing them of operating an “illegal” exchange and a “sham” compliance program.
At the time, Zhao had characterized the suit as “unexpected and disappointing.”
Proactive Engagement With Regulators: Zhao discussed how regulators often attempt to apply traditional financial rules to the cryptocurrency sector, despite fundamental differences.
He argued the cryptocurrency industry should be allowed to flourish while also finding ways to minimize the impact of malicious players.
Zhao asserted, “So it’s really important to very actively engage with regulators,” acknowledging that many regulators may lack experience in the cryptocurrency industry compared to their understanding of traditional finance.
Binance’s Shift In Regulatory Approach: In recent years, Zhao’s views on regulation have evolved. Binance has hired several compliance executives, registered with multiple regulators and sought licenses from others.
While some regulators remain skeptical, Zhao believed “we need to have conversations and we also need to have patience.”
Potential Impact Of Government Control On Crypto Adoption: Zhao suggested government efforts to control cryptocurrencies might inadvertently encourage their adoption. “They are trying to control crypto by shutting down banks, shutting down fiat access, putting more restrictions in the traditional financial markets, which actually pushes more people into crypto, which is doing the reverse of what they want to do,” he said.
To maintain interest in traditional finance, Zhao urged governments to help reduce fees, streamline transactions and improve user experience.
He further said the absence of enhancements in traditional finance would continue to propel cryptocurrency adoption, as more individuals seek decentralized alternatives for their financial needs.