CZ on how Binance is working towards changing the mainstream perception of cryptocurrencies
Over the past year, the cryptocurrency and blockchain technology space saw tremendous growth, in terms of innovation, users, and price. And, this tremendous growth, undoubtedly, had some head turning moments. Like when NFTs sold for millions of dollars, or when the crypto market cap hit a trillion dollars.
While there were big waves last year, this year, so far, has been moving in a more mellow manner in terms of price. Nonetheless, innovation seems to be moving in full swing, with several new projects being launched, and old ones furthering the growth of their platform.
And, in terms of growth, Binance – the largest cryptocurrency exchange in the world – has been making headway. The platform continues to have conversations with regulators and launch products that could further not only its growth but the growth of the entire crypto-ecosystem as a whole.
‘There’s always a balance’
The founder and CEO of Binance – Changpeng Zhao – recently spoke about the platform’s growth and all things crypto, in an interview with CNA. The founder, popularly known as CZ, discussed topics revolving around crypto-regulation, Binance’s global presence, crypto crowdfunding platforms, crypto remittance, collaboration with stock market, and crypto being used for illicit activities.
Starting off, CZ spoke about the duality of the cryptocurrency market and introducing regulation to the market, taking into consideration that it has been taking the stance of not needing one. Here, he stated that there was always an extreme outlook on the subject, it was either “decentralized or centralized”, “regulated or unregulated,” whereas in the real world, there’s always a balance.
The founder also highlighted that in the case of a centralized exchange there was a need for regulation, considering there is money involved. He also pointed out two perks of being regulated. First, protects consumers, and second, boosts innovation – if done right – and enables integration with traditional financial systems. Furthermore, CZ stated that even in terms of regulation, the main focus was on centralized exchanges, adding that the key part was AML/ KYC policies.
Taking the next step forward with regulators
This was followed by the founder speaking about Binance’s relationship with regulators, across the world, particularly what is stopping the exchange from having presence in major financial hubs like New York, London, or Frankfurt. On the matter, the founder stated that the exchange already has a presence in the United States, with the launch of its Binance US platform in 2019.
The U.S branch has license to operate in 43 states, however, it has not established a presence in New York as the state requires a BitLicense to operate in the region. This, however, requires the firm to have a financial audit for three years, and Binance US still hasn’t met the timeline for qualifying. Zhao added,
“In other regions you mentioned, in the UK, we did withdraw our application earlier this year, but we haven’t changed that decision and we are working with the regulators there. Singapore is a small market, it is a very important market, we continue to work with the governments there.”
The exchange has advanced in terms of building relationships with regulators. Towards the end of last year, the exchange announced an MoU with the Dubai World Trade Center, an initiation to create an innovation hub for the global digital market. Additionally, the exchange secured its first in-principle approval in the Middle East North Africa [MENA] region from the Kingdom of Bahrain.
Moreover, CZ stated that there were several governments, which come under G7 and G20, that have been trying to have Binance establish its headquarters there. The founder added that more news related to this would be announced in due time.
Much ado about almost nothing
Subsequently, CZ opined on the famous topic of Bitcoin and other cryptocurrencies being used a tool for illicit activities such as money laundering and terrorist financing. He highlighted that while there is much noise on this subject, in reality, only 3 percent of Bitcoin transactions are being used by bad actors.
Compared to fiat involvement in this subject, Bitcoin stands at a very low percentage. The founder also stated that the association of Bitcoin as a primary tool for illicit actors is a matter of history.
He stated that, at present, crypto has several use cases, and importantly, they can be used as a means to crowdfund innovative projects via ICOs and IEOs.
“This is a use case now. In fact, because it was so easy, you get a lot of scammers but for real entrepreneurs, this is a tool that they can use. And look at NFTs. NFTs is another way for artists to monetize their work globally again”
The recipe to solve cross-border payment problems
Another key topic discussed by CZ was the potential crypto holds in disrupting cross border payments. The global remittance market is one of the biggest industries in the world, with banks recording millions of cross-border payments. According to the exec, currently, the service charge for cross-border payments is nearly 10-20 percent. He added,
“If you are a worker and you see workers wiring $300 dollars back home just to support their families, and they get charged like $20-$30 for that transfer out of the $200-$300. And these are not rich people”
CZ also argued that there is a huge benefit for companies too in terms of adopting crypto as a payment mode for global transactions. The current financial cross-border systems are expensive and time consuming, both problems easily solved by Bitcoin and other cryptocurrencies.
Not quite the Wild Wild West
The crypto-industry has always had the reputation of being the wild wild west considering its high volatility.
Speaking about whether it is akin to gambling, the founder stated that it depends on one’s definition of gambling, adding that it depends on the person and the purpose. He further pointed out that the traditional financial sector is not without its own “speculative” markets, adding that the U.S dollar is used as payments, means of investment, and even by those betting on the currency itself in FOREX markets.
“Some people call it a bet, some people call it investments, depending on what you want to do. And some people use Bitcoin for just payments.”
Finally, speaking of trading volume in traditional markets v. crypto markets, the founder stated that the industry is still very much in its early stages. He added that, so far, only 5 percent of people are invested in crypto globally.
However, this would increase gradually with time and innovation setting in. He added that the last 20 percent of the people would take the longest to onboard, owing to reasons such as lack of technology know-how.
Disclaimer: This is a paid post and should not be considered investment advice