Binance Chairman Changpeng Zhao Urges for Clarity on Crypto Regulations

Binance boss Changpeng Zhao. (Photo; Doc. Conseilcrypto)

JAKARTA – Binance, one of the largest crypto exchanges in the world, welcomes the recently issued crypto regulatory scheme by the International Monetary Fund (IMF).

In a report, the CEO of Binance, Changpeng Zhao (CZ), stated that the scheme is very beneficial for cryptocurrencies and related businesses. According to CZ, the most effective method of user protection is risk-based regulation implemented on a worldwide scale.

The scheme issued by the IMF consists of five points proposing that crypto asset service providers be licensed, registered and authorized. This includes businesses that offer services such as depository, transfer, exchange, settlement and depository, which are subject to regulations comparable to those that control service providers in the traditional financial sector.

The scheme also demands that the assets belonging to the customer be kept in a different location than that of the company itself, and the responsible authority is made very clear.

In response to the potential threat of cryptocurrencies facing outright bans in some jurisdictions, CZ stated that "outright bans will only lead to users operating in the shadows, at their own risk, and without a safety net."

He emphasized that the cryptocurrency industry wants strong, comprehensive and globally consistent crypto legislation so that it can accommodate its cross-border nature. CZ also stated that for a global strategy to be successful, it needs to evolve as the landscape of the sector changes.

According to the IMF, crypto businesses must be subject to strict transparency restrictions in order for all dependencies and operations to be properly defined. Binance's CEO, Changpeng Zhao (CZ), stated that a risk-based regulatory approach on a global scale is the most effective method of user protection.

CZ also stressed the importance of clarity on regulations as soon as possible, especially in dealing with stablecoins which are increasingly favored by investors as a form of store of value. According to CZ, stablecoin issuers must adhere to strict prudential standards so as not to threaten the stability of the monetary and financial system.

“Stronger financial regulation & oversight, and the development of global standards, can help address many concerns about crypto assets. Regulatory clarification is needed ASAP,” CZ wrote on Twitter, January 24, 2023.

In the case of significant stablecoins, a level of regulation comparable to that prevalent in the banking industry may be required. CZ also stated that user protection and market integrity would be better when politicians and regulators broaden the scope of permitted activities.