Binance CEO Changpeng Zhao emphasizes the need for a proper understanding of the crypto industry by regulators and active engagement by industry players to achieve regulatory clarity.
In a fireside chat during the Hong Kong Web3 Festival, Changpeng Zhao (CZ), CEO of Binance, expressed that it is important for crypto regulators to have a deep understanding of the industry to facilitate proper crypto regulations. The fireside chat was moderated by Deng Chao, the CEO of Hashkey Capital.
According to CZ, “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” He went on to explain that knowing the answers to simple questions like how to classify different assets is important in deciding on regulations for the industry, as there are many types of crypto assets. Some assets may look like securities, others like commodities, or utility tokens, some may even have a combination of those characteristics.
When asked his recommendation on good regulation framework, CZ said that having unclear regulations is “the worst” and having regulatory clarity is better. He went on to say that it’s best to let the industry develop fully before introducing regulations. The particular reason for this is that it’s difficult to predict what exactly is going to be popular in the industry.
In relation to crypto industry players and their approach towards crypto regulators, CZ advised that there is a need to be very actively engaged with them. He explained that though many of the crypto regulators all around the world are very receptive, there are some who are still very skeptical. However, skepticism should deter crypto industry players from engaging the regulators in conversations.
Responding to what could trigger mass adoption of crypto, CZ said that the fact that many governments are trying to come for crypto may actually be the trigger to make crypto grow. He explained that the government’s efforts in shutting down banks, fiat access and putting more restrictions on the traditional financial markets actually push more people towards crypto.
CZ stressed the need for crypto industry players to exercise patience. He said that understanding that the first draft of regulations is always likely overly restrictive is important and so in just a matter of time, a balance is usually found.
Hong Kong supporting web3 recently showed support for Web3 by taking major steps to develop the Web3 industry.