Amid cryptocurrency’s Wild West, Binance calls for sheriff
Company releases 10 fundamental rights as guide to protect users
The cryptocurrency market gets likened to the Wild West by critics, and now a key player is asking for sheriffs to come to town.
Binance, the world’s largest exchange for trading Bitcoin and other cryptocurrencies, says it’s time for global regulators to establish rules for crypto markets. It released a list of “10 fundamental rights for crypto users” this week that it wants to guide discussions with regulators, policymakers and other exchanges.
The company acknowledges that crypto platforms have an obligation to protect users and to implement processes to prevent financial crimes, along with the responsibility to work with regulators and policymakers to set standards to keep users safe.
The call for regulation might seem strange for an industry whose popularity exploded in some part precisely because it sought to operate outside the heavy hand of governments and other authorities. But Binance CEO Changpeng Zhao, who goes by “CZ,” says more regulation for the industry is inevitable, and this allows his company to play a role in the discussions. It may also help draw in people who are still hesitant to get into crypto.
“This year, most of the regulators around the world are looking at crypto intently, and many of them are communicating with us,“Zhao said. “So we feel this is the right time” to
issue a call for a global framework.
“We feel that it is important for industry players to have a seat at the table,” he said. “And we also feel that some regulations, if they’re made in a vacuum, may not have practical considerations in how they are applied, and they don’t get applied very well.”
Regulatory scrutiny of cryptocurrencies has intensified as they’ve grown more mainstream. Big businesses, professional investors and even the government of El Salvador are all buying in, even if critics struggle to see the value of digital currencies created by non-governments. They’re broadening crypto’s base beyond its initial core of fanatics and sent Bitcoin last week to a record high of nearly $68,991, more than doubling in 2021.
Binance’s call for regulation reminds some on Wall Street of the playbook that companies have followed in other disruptive industries after becoming big winners.
“They’re doing what Uber and Lyft did,” said Gil Luria, technology strategist at D.A. Davidson. “Build a business ahead of regulations. When it
gets to a certain scale, acknowledge that regulation will be helpful and then help shape it.”
Zhao said that Binance welcomes regulations “for many reasons. One of those minor reasons is a selfish reason: that in a regulated industry, the few larger players will remain. The smaller players do get cut off, which is unfortunate for those guys.”
The move could also prove to be wise if Binance’s U.S. business ultimately tries to sell stock on a U.S. exchange, something Zhao hopes will happen in the next few years. A competitor, Coinbase, has already fetched a nearly $74 billion market value on Wall Street following its initial public offering this spring.
Such opportunities for wealth have drawn more new investors into crypto, as well as the eyes of regulators.
“Right now, we just don’t have enough investor protection in crypto,” Gary Gensler, chair of the Securities and Exchange Commission, said in a speech this summer while calling it the “Wild West.”
“This asset class is rife with fraud, scams, and abuse in certain applications,” he said.