Changpeng Zhao: Clearness Of Cryptocurrency Regulations Can Be Achieved If Regulators Involve Crypto Industry Players

Binance founder Changpeng Zhao. (Photo; Doc. Celulari)

JAKARTA - Binance CEO Changpeng "CZ" Zhao, recently expressed his views on cryptocurrency regulation as a guiding principle for a class of digital assets. According to Zhao, regulators need to understand digital currencies well to formulate appropriate rules for effective oversight.

Binance CEO also added that regulatory clarity can only be achieved through active engagement between regulators and major stakeholders in the cryptocurrency industry.

At the Hong Kong Web3 Festival in 2023, CZ shared his thoughts on cryptocurrency regulation and mass adoption of Web3. In a question and answer session with HashKey Capital CEO Deng Chao, Binance CEO said that appropriate cryptocurrency regulation would increase mainstream adoption.

However, Zhao also stressed that cryptocurrency regulators should reduce dependence on mainstream financial principles in formulating cryptocurrencies.

"There is a natural tendency to borrow from traditional financial industry regulations to apply to cryptocurrencies. Cryptocurrencies are different from traditional banks and finance industries," Changpeng Zhao was quoted as saying by CoinSpeaker.

Furthermore, Binance CEO added that decision making related to crypto regulation relies on how to classify different digital assets. According to Zhao, there are several types of crypto assets, and knowing how to classify each one is crucial.

CZ also explained that some cryptocurrency assets look like securities while others are similar to commodities or utility tokens. Binance's CEO also added that some digital assets may even have combinations of all previously mentioned characteristics.

Zhao argues that the cryptocurrency industry should be given the opportunity to fully develop before introducing regulation. The reason for this 'full circle' suggestion is that one cannot definitively predict what will be popular in the crypto world.

However, CZ also said that cryptocurrency industry players should be more patient when the regulatory process takes place. According to Binance's CEO, the first draft regulations are usually too restrictive, but the next drafts are gradually balanced over time.

In this year's Hong Kong Web3 Festival, CZ emphasizes the need for regulators to actively engage with players in the cryptocurrency industry. He acknowledged that despite an increase in the number of regulators receiving cryptocurrencies worldwide, some are still skeptical. According to Zhao, any form of skepticism or cynical attitude towards cryptocurrency regulation could hinder this industry participants.