Binance has informed global leaders that new regulations are essential.
At a recent conference in Bali attended by G20 leaders, Changpeng Zhao, CEO of Binance, the largest cryptocurrency exchange globally, advocated for the establishment of new regulations. Zhao emphasized the necessity of consumer protection and the long-term viability of the crypto sector. Furthermore, Binance introduced a recovery fund aimed at aiding distressed crypto enterprises.
The recent collapse of FTX, a competing exchange launched by Sam Bankman-Fried, has sparked anxiety among small investors apprehensive about potential losses. This incident has profoundly affected the crypto landscape, erasing billions in value. In light of this, Binance’s recovery fund seeks to provide support to struggling crypto firms and stabilize the market.
CZ stated
“We definitely need regulations, we need to approach this properly, and we must do it in a stable manner.”
he added,
“The crypto industry as a whole shares the responsibility of safeguarding consumers and protecting everyone’s interests. It’s not solely the duty of regulators,”
Currently, the regulation of cryptoassets in various countries pales in comparison to other financial sectors, with minimal consumer protections in place.
The UK government has previously unveiled intentions to regulate stablecoins, which aim to maintain a stable value linked to conventional currencies or assets like gold.
On November 10, Binance released its cold wallet addresses to illustrate its adequate capital reserves in the event of a bank run. The exchange also disclosed its holdings in the six largest cryptocurrencies by market capitalization. Together, these wallets hold assets valued at $65 billion, including $21.3 billion in BUSD—a stablecoin developed by Paxos in collaboration with Binance—and $6 billion in BNB.
Binance affirmed
“This does not represent a complete dataset, which we will provide later in a comprehensive audited report,”
Binance added.
“Binance’s major possessions comprise $13.4 billion in USDT, nearly $8 billion in BTC, and $6 billion in ETH. This does not represent a complete dataset, which we will provide later in a comprehensive audited report.”
CZ dismissed concerns that holding a substantial amount of BUSD could endanger Binance’s solvency, underscoring that BUSD is issued by Paxos, a regulated blockchain entity subjected to audits by New York’s Department of Financial Services. Based on transparency reports from Paxos, BUSD is fully backed by USD.
Zhou posited that a significant portion of an exchange’s balance sheet ought to be comprised of stablecoins, particularly during bear markets. CZ further noted that investors should be cautious of exchanges with minimal stablecoin reserves as industry participants begin to produce proof-of-reserves.
“If their assets do not encompass a large percentage of stablecoins, that raises a red flag,”
he remarked.
“During bear markets, many investors convert Bitcoin, Ethereum, and BNB into stablecoins… Our allocations are quite robust.”
The crypto industry has seen regulatory evolution through recent initiatives such as the EU’s Markets in Crypto Assets (MiCA) proposal and Japan’s legislation aimed at stablecoins to safeguard investors. Moreover, the UK has finalized a consultation regarding the regulation of cryptoassets and stablecoins, while the US has unveiled its first regulatory framework for cryptocurrencies in September. The US seems poised for a wave of stricter regulations, driven by both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), who are pushing for updated regulations.
Changpeng Zhao, CEO of Binance, recently remarked that Europe’s MiCA regulatory framework could serve as a global benchmark. Under the proposed MiCA rules, crypto companies would only need a single license to operate across the entire European Union comprising 27 nations.
On June 30, 2022, EU legislators reached an agreement to adopt the MiCA regulation framework to regulate cryptoassets and stablecoins.
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