Changpeng Zhao (CZ), the Canadian CEO and founder of Binance, the world's largest crypto exchange, said in a recent tweet that regulation can benefit the crypto industry and ultimately lead to more mainstream adoption by providing guidance and confidence to both those who provide crypto services and those who use them.
In a recent interview with the Austin Journal, Brian Armstrong, the co-founder and CEO of crypto exchange Coinbase, also said that regulation could play a key role in restoring trust in the crypto industry that has been harmed by the alleged fraud perpetrated by Sam Bankman-Fried, the founder and former CEO of crypto exchange FTX, which filed for bankruptcy in November.
"Regulation, done correctly, can be a huge benefit for the space. It should provide clarity and confidence for users and service providers, making adoption a faster process," CZ said.
Binance outlined its position on compliance in a March blog post, which said that although some in the crypto industry might believe that regulation contradicts the decentralized nature of crypto, Binance welcomes "the increasing involvement and actions from regulatory bodies and governments in the crypto space." Binance said its goal has always been to protect users and encourage innovation, and it believes greater regulatory guidance is a way to ultimately help grow the crypto industry.
"Before there were clear guidelines for the industry, we have always held Binance to the highest standard to prioritize our users' best interests — a goal that we share with regulators around the world," CZ said in the blog post.
CZ has welcomed the steps taken by governments and regulatory authorities around the world as they move toward regulating crypto. When the Financial Action Task Force (FATF), a global organization dedicated to combatting money laundering, released its latest annual report, CZ said in a Feb. 8 Twitter post that Binance "shares their view that strong standards are critical to the future of this industry, especially on pressing issues like money laundering and financial crime...Further exploration was made on how technology can play a key role in detecting suspicious financial activities, including money laundering. This detection is essential to creating and maintaining a safe ecosystem of money. Transparent blockchains are great tools too...Global standards provide clarity and consistency — key factors of effective regulation, but they can only be helpful if implemented across the board."
Earlier this month, when the United Kingdom's economic and finance ministry issued a consultation paper outlining the next steps in its digital asset regulation plan, CZ said in a tweet, "Happy to see the UK, a global leader in fintech, work on progressive crypto regulation...Regulation provides certainty and a safe space for innovation," the Globe Banner reported.
Binance said on Twitter that it "has vocally supported the need for effective and appropriate regulation to help with mainstream adoption of digital assets. We welcome the next steps from the UK Government in making this happen with the @hmtreasury’s publication of plans to regulate crypto activities. It’s our strong belief that a stable regulatory environment helps to support innovation and is essential to establishing trust in the industry, as well as long-term growth. Binance is reviewing the details of the consultation and looks forward to contributing to the process."
Binance published a list of "10 Fundamental Rights for Crypto Users", which it hopes could serve as guidance for regulatory agencies as they discuss and develop regulatory framework, according to a blog post.
The list compares regulation to seat belts, saying that increased regulatory guidance serves to protect everyday users. The second principle listed is that "Industry participants have a responsibility to work with regulators and policymakers to shape new standards for crypto assets. Smart regulation encourages innovation and helps keep users safe." Other items on the list call for transparency, security, liquidity, knowledge-sharing, fairness and access to emerging technology. It concludes that "Crypto regulation is coming. And we believe it will change the industry for the better."
In a recent interview with the Austin Journal, Coinbase CEO Armstrong said that the crypto industry "basically has a black eye" because of the actions of malicious actors in 2022, but said those actions are "not representative of the entire industry, and crypto isn’t going anywhere." He said he welcomes regulations and believes they will play a key role in restoring trust to the industry that was damaged by FTX's high-profile bankruptcy, but that politics is proving to be a barrier in moving regulations forward.
“Some regulators don’t want regulatory clarity for crypto, because they are actually trying to curtail the industry,” Armstrong said. “Harsh rhetoric and regulation by enforcement, without creating clear rules for everyone to follow, has pushed much of the industry outside the U.S., which has resulted in American investors and businesses being harmed.”
Armstrong wrote in a December blog post that regulation that provides clarity and a level playing field while leaving room for innovation will enable the crypto industry to reach its potential in benefitting other industries. “Right now there is too much distraction from bad actors causing harm, and we all need to take responsibility for improving this,” Armstrong said. “I’m optimistic that we can make significant progress on the above in 2023 and get crypto legislation passed."
