Changpeng Zhao (CZ), the founder of Binance, the world’s largest crypto exchange by trading volume, was speaking at a fireside chat during the Hong Kong Web3 festival when he told Deng Chao of Hashkey Capital the worst thing in the cryptocurrency industry.
Zhao was one of 300 industry speakers at the four-day Hong Kong event, which drew more than 10,000 attendees.
Regulatory uncertainty is the worst thing for crypto
The CEO of Binance criticized enforcement-based regulation and cautioned that a lack of regulatory clarity would be even worse for the developing decentralized finance market.
“Having no regulatory clarity is the worst. Having bad, restrictive regulations is better than that,” Zhao said at Wednesday’s Hong Kong Web3 Festival. “And then having unclear ones, and then chasing people by enforcement, is really, really bad.”
According to CZ, the regulatory campaign against cryptocurrency brings attention to the sector. He asserts that regulators are attempting to control crypto by closing down banks, restricting fiat access, and tightening restrictions on traditional financial markets, which is driving more people into crypto, which is the opposite of what they want.
Most regulators lack industry knowledge, the CEO of Binance said
Zhao added that, most regulators lack experience in the cryptocurrency market, in contrast to traditional financial regulators who have worked for banks and have a better understanding of that sector.
“So it’s really important to very actively engage with regulators,” he said. “We can’t just say, hey, look, this is decentralized. We are nowhere.”
This remark came as he, Binance Exchange, and several other companies and individuals were having difficulties with US regulators. The US Commodity Futures Trading Commission filed a lawsuit against CZ and his company last month on the grounds that they were running an “illegal” exchange and a “sham” compliance program.
Zhao described the lawsuit as “unexpected and disappointing” at the time. Then, last week, Binance’s derivatives license was revoked by the Australian Securities and Investments Commission.
Meanwhile, he thinks that the initial iteration of rules is frequently too restrictive and that it will take some time to find an ideal balance. He also thinks that as more countries adopt crypto regulations, it will create a global standard that will benefit the industry and make it easier for businesses to operate across borders.
Changpeng Zhao’s (CZ) most recent remark emphasizes regulators’ importance in maintaining an equilibrium between safeguarding investors and encouraging innovation in the cryptocurrency industry. Excessive regulation may stifle development and impede cryptocurrencies’ potential contributions to the currently “failing” traditional financial system.